Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 6 - Part II - Supply, Demand, and Government Policies - Problems and Applications: 1

Answer

If a binding price ceiling is imposed, fewer people will attend classical music concerts.

Work Step by Step

A price ceiling is a legal maximum on the price at which a good must be sold. Since the price ceiling moves the price below the existing equilibrium price, the quantity demanded is greater than the quantity supplied of the good at the new market price, so there will be a shortage. In other words, since the price ceiling moved the market price for tickets down to $40, more people will want to attend the concerts. However, at this lower price, producers will only be able to afford to sell a smaller amount of tickets. So more people than before will want to attend the concerts, but producers will be able to distribute fewer tickets.
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