In Rolling Stone magazine, several fans and rock stars, including Pearl Jam, wer

Question

In Rolling Stone magazine, several fans and rock stars, including Pearl Jam, were bemoaning the high price of concert tickets. One superstar argued, "It just isnt worth $75 to see me play. No one should have to pay that much to go to a concert." Assume this star sold out arenas around the country at an average ticket price of $75.

question:

Suppose Pearl am really wanted to bring down ticket prices. Since the band controls the supply of its services, what do you recommend they do? Explain using a supply and demand diagram.

Explanation / Answer

Pd= price demand; Qd=quantity demand; Ps=price supply; Qs=quantity supply; P*=equilibrium price; Q*=equilibrium quantity. If the demand for the band is more than anticipated (sold out arenas), then the point [Pd ($75), Qd (more than anticipated)] is to the left of the equilibrium (P*, Q*), creating a shortage of supplies. The band which controls the supply would have to ____________ to counter the shortage of supplies.

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