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Econ Written Report

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Written Report
Student name: Ho Sze Wing
Student PolyU ID number: 14089919D
Programme enrolled: Introduction to Economics
Name of lecturer: Wai Kwong Mok
Name of tutor: Xibin Zhang
Tutorial group number: AF1605_20141_D
Tutorial day and time: Monday (17:30-18:20)
Number of words used in the report: 914

Question 2.2
Price
($ per ticket)
Supply
Demand
Quantity
36000
600
(500)
(500) E
34000

0

This diagram shows the relationship between the demand and the supply of three concerts held by a pop singer last year and this year. The supply is vertical and does not change in these two years as the amount of seats in the Hong Kong Coliseum is the same and fixed. Also, since the question mentioned there is only one fixed price for all seats and the demand for this pop singer’s concert were the same in last year and this year, we can find out the range of equilibrium price for this singer’s concert. For the fixed supply, there are 12000 seats in the Hong Kong Coliseum, and there are three concerts each year. Therefore, there were 36000 seats (12000X3) each year. Last year, the concerts were sold out and the ticket cost $500 per one. This year, the ticket price was raised to $600 each, and there were 2000 unsold ticket. That means there was a surplus this year and when the price level is at $600, the quantity demanded and the quantity transacted is 34000 tickets (36000-2000). As the given information notes the tickets were sold out only, we cannot determine whether there was a shortage of tickets last year. Thus, we have two cases in order to find the range of the equilibrium price.
First, if there was no shortage of tickets, 36000 tickets will be the quantity transacted at price level $500. And the equilibrium price would be at $500.
Second, if there was a shortage of tickets, the quantity demanded will be larger than the quantity supplied.

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