# 幾條Econ問題

Suppose the price of concert tickets at City Hall is determined by market force. The demand and supply schedules of tickets are as follows:

P(\$)│QD│QS

40 │ 2,500 │ 2,000

60 │ 2,000 │ 2,000

80 │ 1,500 │ 2,000

100 │ 1,000 │ 2,000

120 │ 500 │ 2,000

P=Price(\$) QD=Quantity Demanded QS=Quantity Supplied

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

(b)Using mid-point method, calculate the price elasticity of elasticity of demand when the price of tickets drops from \$120 to \$100(give your workings).

(c)Explain the price elasticity of supply of the tickets.

(d)If the maximum price of all tickets is fixed at \$40, explain what will happen in the market.

(e)Due to effective promotion, the demand of tickets is double. Modify the above demand schedule and find the new equilibrium price and quantity.

(f)Calculate the change in total revenue before and after promotion.

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a). equilibrium price=\$60. quantity of tickets=2000.

b). % change in quantity demanded = 1000-500 / 1000 =-0.5

% change in price = 100-120 / 120 = 0.167

price elasticity of demand = -0.5 / 0.167 = 2.99 (Ed >1)Therefore,the price is elastic.

c). The price elasticity of supply of the tickets is perfectly inelastic because the supply curve is fixed at the quantity of 2000 and it's vertical.

d). If the max. price of all tickets id fixed at \$40, it's a excess demand beacause the price it set below the equilibrium price.

e).after the promotion,

P(\$)│QD │QS

40 │ 5000 │ 2,000

60 │ 4000 │ 2,000

80 │ 3000 │ 2,000

100│ 2000 │2,000

120│ 1000 │ 2,000

The new equilibrium price= \$100. the new equilibrium quantity = 2000.

f). The total revenue before the promotion= \$60 x 2000 =\$ 120000.

The total revenue after the promotion = \$100 x 2000 =\$ 200000.

The increase in total revenue = \$(200000-120000)=\$80000.