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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Suppose that the price of basketball tickets at your college is determined by market forces. Currently, the demand and supply schedules are as follows:

Price Quantity Demanded Quantity Supplied
$4 10,000 tickets 8,000 tickets
8 8,000 8,000
12 6,000 8,000
16 4,000 8,000
20 2,000 8,000

a. Draw the demand and supply curves. What is unusual about this supply curve? Why might this be true?

b. What are the equilibrium price and quantity of tickets?

c. Your college plans to increase total enrollment next year by 5,000 students. The additional students will have the following demand schedule:

Price Quantity Demanded
$4 4,000 tickets
8 3,000
12 2,000
16 1,000
20 0

Now add the old demand schedule and the demand schedule for the new students to calculate the new demand schedule for the entire college. What will be the new equilibrium price and quantity?

To find additional study resources, visit cengagebrain.com, and search for “Mankiw.”

Subpart (a):

To determine

Equilibrium in the market.

Explanation

Figure 1 illustrates the equilibrium position in the economy.

Figure 1 illustrates the demand and supply curves of basketball tickets...

Subpart (b):

To determine

Equilibrium in the market.

Subpart (c):

To determine

Equilibrium in the market.

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