Economics Written Report
Yang Lu (Fiona)~12131927D
There are 12,000 seats in the Hong Kong Coliseum. Last year the pop singer had three concerts in it and his concert ticket cost $500 (assuming that there’s only one fixed price for all seats) and the concerts were sold out. It means that last year the organizer sold 36,000 tickets for $500 each.
This year, the organizer still organized three concerts but raised the ticket price to $600 each and there were 2,000 unsold tickets. Suppose the demand for this pop singer’s concert were the same in last year and this year. It means that this year, though the demand has not changed, the organizer only sold 34,000 tickets for $600 each.
Question: Was $500 the equilibrium market price last year?
According to the given information, I think there are two possible situations:
Situation1. $500 was the equilibrium price.
Since the seats in the coliseum cannot be changed, so that the supply of the tickets is perfectly inelastic. Thus the supply curve shall be vertical. Here is the demand curve and supply curve of these two years.
Last year, $500 was the equilibrium price, the market was at the equilibrium point. Besides, 36,000 tickets was the equilibrium quantity. This year, the price was raised from $500 to $600, which was above the equilibrium price, so that fewer people would like to buy the tickets at this price. Then a market surplus appeared. Only 34,000 tickets were sold.
Situation2. $500 was not the equilibrium price.
Last year, since all the tickets were sold out, so $500 wasn’t above the equilibrium price, and also it is not the equilibrium price. Thus last year, $500 was below the equilibrium price.
The following diagrams are the demand curve and supply curve of these two years in situation2.
Last year, ticket price ($500) was below the equilibrium price. Quantity demanded was larger than quantity supplied. So the market was not at the equilibrium point. A...
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