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Principles of Economics | 6th Edition | ISBN: 9780538453059 | Authors: N. Gregory Mankiw
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Suppose that the price of basketball tickets at your college is determined by market

Chapter 4, Problem Problems and Applications 4.13

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QUESTION:

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?

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QUESTION:

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?

ANSWER:

Step 1 of 4

The price in the market also gets affected due to the curvature of the demand and supply. If the demand (supply) is fixed, then with the change in supply (demand), only the price changes the quantity has no effect.

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