Question

1. Suppose that the price of basketball tickets at your college is determined by market forces.

Currently, the demand and supply schedules are as follows: (8)


Price ($) Quantity Demanded (tickets) Quantity Supplied (tickets)

4 10000 8000

8 8000 8000

12 6000 8000

16 4000 8000

20 2000 8000


(a) Draw the demand and supply curves. What is unusual about this supply curve?

(b) What are the equilibrium price and quantity of tickets?

(c) The college increases total enrolment by 5000 students. The demand schedule of the

additional students is given as follows:


Price ($) Quantity Demanded (tickets)

4 4000

8 3000

12 2000

16 000

20 0


Calculate the new demand schedule for the entire college? What will be the new equilibrium

price and quantity demanded of tickets?

Answer 1

Answer:

hope it's helpful for you

Answer 2

Answer:

(a) The given data on quantity demanded and supplied can be plotted as shown in the attached image. The peculiar thing about the supply curve is that it is vertical while the demand curve is downward sloping. However, a vertical supply curve is not entirely unheard of as it indicates a situation where the firm has undertaken the production and requires to get rid of all its produce, irrespective of the market price. In the given case, the vertical supply curve indicates that the number of seats is fixed.

(b) The demand and supply curve, as depicted in the given diagram, intersect at the point where:

Price = $8

Quantity = 8000 units

Therefore, the equilibrium price and quantity are $8 and 8000 units respectively. Equilibrium point is the point at which the demand and supply curves intersect with each other.

(c) The additional students increase the demand for tickets and the demand curve tilts rightward as shown in the attached diagram. After the increase in demand, the demand and supply curves intersect where the price is $12 and the quantity is 8000 units. Therefore, while the equilibrium quantity remains the same, the equilibrium price shifts to $12.

Explanation:

• The given data on quantity demanded and supplied can be plotted as shown in the attached image. The peculiar thing about the supply curve is that it is vertical while the demand curve is downward sloping. However, a vertical supply curve is not entirely unheard of as it indicates a situation where the firm has undertaken the production and requires to get rid of all its produce, irrespective of the market price. In the given case, the vertical supply curve indicates that the number of seats is fixed.
• Equilibrium point is the point at which the demand and supply curves intersect with each other. The demand and supply curve, as depicted in the given diagram, intersect at the point where:

Price = $8

Quantity = 8000 units

Therefore, the equilibrium price and quantity are $8 and 8000 units respectively.

• The additional students increase the demand for tickets and the demand curve tilts rightward as shown in the attached diagram. After the increase in demand, the demand and supply curves intersect where the price is $12 and the quantity is 8000 units. Therefore, while the equilibrium quantity remains the same, the equilibrium price shifts to $12.

#SPJ3