Chapter 4, Problem 24P

To determine

(a)

Mention the equilibrium price.

The market of baseball tickets at your college stadium, which seats $2000$ is the following.

Price	Quantity demanded	Quantity supplied
$\$2$	$4,000$	$2,000$
$\$4$	$2,000$	$2,000$
$\$6$	$1,000$	$2,000$
$\$8$	$500$	$2,000$

Answer to Problem 24P

The equilibrium price for baseball tickets is $\$4$

Explanation of Solution

The above table shows a different prices with respect to change in demand and supply of the baseball tickets, as at price $\$4$ the quantity demanded is equals to quantity supplied, which is $2,000$ seats

Economics Concept Introduction

CONCEPT INTRODUCTION:

Equilibrium price is defined as the point at which the quantity demanded is equal to quantity supplied. It is the price at which supplier is ready to supply its goods and services and buyer is ready to buy the product and services. Equilibrium price tends to stay stable but the variables that affects the supply and demand chain in turn affects the price of the equilibrium. When the demand and supply curves meets that point is considered as equilibrium price point.

To determine

(b)

Figure out what is unusual about the supply curve.

The market of baseball tickets at your college stadium, which seats $2000$ is the following.

Price	Quantity demanded	Quantity supplied
$\$2$	$4,000$	$2,000$
$\$4$	$2,000$	$2,000$
$\$6$	$1,000$	$2,000$
$\$8$	$500$	$2,000$

Answer to Problem 24P

Here the unusual thing about the supply curve is that its line is straight parallel to Y- axis instead of having a slope.

Explanation of Solution

While analyzing the table one can see no change in the quantity supplied as the maximum sitting of the stadium is fixed which cannot be change with the change in price of the tickets. Since there is will be no change in the quantity supplied, the supply curve would be considered as perfectly in elastic, here the quantity supplied remain ineffective by any change in the price

Hence the curve will move parallel to Y- axis creating straight line.

Economics Concept Introduction

CONCEPT INTRODUCTION:

The positioning of supply curve with respect to price and quantity axis determines elasticity of the supply curves. The elasticity of the supply curve depends on the willingness of the supplier to change its price of the goods and services. Very elastic supply curve indicate very responsive towards the change in price of the goods and service while inelasticity refers to unresponsiveness towards the change in price.

To determine

(c)

Mention the prices at which the shortage will occur.

The market of baseball tickets at your college stadium, which seats $2000$ is the following.

Price	Quantity demanded	Quantity supplied
$\$2$	$4,000$	$2,000$
$\$4$	$2,000$	$2,000$
$\$6$	$1,000$	$2,000$
$\$8$	$500$	$2,000$

Answer to Problem 24P

Here shortage will occur at ticket price $\$2$, since the quantity demanded $4,000$ is more than quantity supplied $2,000$.

Explanation of Solution

As the definition of market shortage states that when the quantity demanded is more than the quantity supplied this situation is referred to as market shortage, here when observed in the table the quantity demanded exceeds up to $2,000$ which is double the amount of quantity supplied, hence $\$2$ is the price at which market shortage will occur

Economics Concept Introduction

CONCEPT INTRODUCTION:

Shortage:- Some time the market is not in equilibrium, the quantity demanded exceeds to quantity supplied this stage is known as market shortage. It is a situation in which the consumers is not able to buy as much products as it needs due to disequilibrium created by demand and supply.

To determine

(d)

Mention the prices at which surplus will occur.

The market of baseball tickets at your college stadium, which seats $2000$ is the following.

Price	Quantity demanded	Quantity supplied
$\$2$	$4,000$	$2,000$
$\$4$	$2,000$	$2,000$
$\$6$	$1,000$	$2,000$
$\$8$	$500$	$2,000$

Answer to Problem 24P

Here at price $\$6$ and $\$8$ the quantity demanded was $1,000$ and $500$ respectively which is way low as compared to quantity supplied.

Explanation of Solution

As we observe the table the prices at which the demand is less as compared to supply of the tickets are $\$6$ and $\$8$

At both the occasions the when demand of the tickets are compared with the supply of ticket. There is huge gap in between them.

Economics Concept Introduction

CONCEPT INTRODUCTION:

Market surplus is a stage when the quantity supplied is more than the quantity demanded. The reason could be to earn more profit or to get rid of stored stocks. The purchasing power being constant and increase in supply of goods and services causes disequilibrium within the market

To determine

(e)

If there is addition of new students (all baseball fans) next year of around $1,000$ to the quantity demanded at each price. Determine the effect will have on demand curve. Also, new equilibrium price.

The market of baseball tickets at your college stadium, which seats $2000$ is the following.

Price	Quantity demanded	Quantity supplied
$\$2$	$4,000$	$2,000$
$\$4$	$2,000$	$2,000$
$\$6$	$1,000$	$2,000$
$\$8$	$500$	$2,000$

Answer to Problem 24P

The new quantity demanded and quantity supplied schedule are as shown in the table

Price	Quantity demanded	Quantity supplied
$\$2$	$5,000$	$2,000$
$\$4$	$3,000$	$2,000$
$\$6$	$2,000$	$2,000$
$\$8$	$1,500$	$2,000$

Also as can been determined now the new equilibrium price would be $\$6$ as the quantity demanded and quantity supplied is equal at this price point

Explanation of Solution

New schedule of demand and supply as shown in the table

Price	Quantity demanded	Quantity supplied
$\$2$	$\begin{array}{l}4,000+1,000\\ =5,000\end{array}$	$2,000$
$\$4$	$\begin{array}{l}2,000+1,000\\ =3,000\end{array}$	$2,000$
$\$6$	$\begin{array}{l}1,000+1,000\\ =2,000\end{array}$	$2,000$
$\$8$	$\begin{array}{l}500+1,000\\ =1,500\end{array}$	$2,000$

If there is addition of 1000 students next year who all are baseballs fans, this would lead to addition to quantity demanded the equilibrium price point will shift towards price where demand and supply are same.

Economics Concept Introduction

CONCEPT INTRODUCTION:

Equilibrium price is defined as the point at which the quantity demanded is equal to quantity supplied. It is the price at which supplier is ready to supply its goods and services and buyer is ready to buy the product and services. Equilibrium price tends to stay stable but the variables that affects the supply and demand chain in turn affects the price of the equilibrium. When the demand and supply curves meets that point is considered as equilibrium price point.