3. Use the following table to answer the questions that follow: LO 3.7 a. If thi

Question

3. Use the following table to answer the questions that follow: LO 3.7 a. If this table reflects the supply of and demand for tickets to a particular World Cup soccer game, what is the stadium capacity? b. If the preset ticket price is $45, would we expect to see a secondary market for tickets? Would the price of a ticket in the secondary market be higher than, the same as, or lower than the price in the primary (original) market? c. Suppose for some other World Cup game the quantity of tickets demanded is 20,000 lower at each ticket price than shown in the table. If the ticket price remains $45, would the event be a sellout? Quantity Supplied, Thousands 60 60 60 60 60 60 60 Quantity Demanded, Thousands 80 75 70 65 Price $25 35 45 65 75 85 60 50

Explanation / Answer

1) The supply of tickets is constrained by the stadium capacity and hence the statdium capacity is 60 thousands.

2) At a price of $45, demand for tickets is greater than the supply and this will give rise to a secondary market for tickets. The price in this secondary market will be higher as there will be people willing to buy tickets at a higher price and the higher price in the secondary market will compensate for the shortage in the primary market,

3) If 20000 less tickets will be demanded at $45 then the total demand will be 70000-20000=50000 and this demand is less than the stadium capacity of 60000 and so it wont be a sellout

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