Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 3 - Demand, Supply, and Market Equilibrium - Appendix - Problems: 3

Answer

Part a) 60 thousand Part b) A secondary market for tickets would be expected, where the price is higher than the price in the primary market Part c) The event would not be a sellout

Work Step by Step

Part a) Quantity Supplied in the table is fixed at 60 thousand, hence it can be assumed that it is the maximum capacity of the stadium is 60 thousand Part b) At $45, quantity demanded is at 70 thousand, whereas quantity supplied is at 60 thousand. Thus, is a shortage of 10 thousand, and a secondary market will form to address this shortage and provide for the people who are willing but not able to purchase tickets. Since the equilibrium price is 65, (where both quantity demanded and quantity supplied is both 60 thousand), the price of the secondary market would at least be 65, since market forces of demand and supply would be able to determine the equilibrium price and quantity in the secondary market Part c) At the price of $45, the original quantity demanded is 70 thousand. After subtracting 20 thousand off 70 thousand as the other World Cup game has lesser demand, the new quantity demanded would be 50 thousand. The quantity supplied is at 60 thousand. Thus, there would be a surplus of tickets of 10 thousand, and thus the event is not a sellout as there are 10 thousand empty seats
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