econ q5.4.pptx

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Q5.4 Brother KaKa, a famous pop singer from the South Pole, is going to ho ld one concert at the TST Coliseum which has a capacity of 12,000 seats . Brother KaKa attracts various types of audience and the reservation pr ices (i.e., maximum price willing to pay) for attending his concert for ea ch type of audience are as follows
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Q5.4a) What is the equilibrium price of Brother KaKa’s concert ticket? The equilibrium price of Brother KaKa’s concert ticket is $150 0. As the maximum demand is 12000 when reservation price is $1550, From statement : Due to the limitation of the computer booking syste m, the price charged by the concert organizer can only be stated in m ultiples of hundred dollars (e.g., $2,000, $1,900, $1,800, etc).
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Q5.4b) Compared with the situation that the concert organizer sets the ticket price at the equili brium level, what is the magnitude of deadweight loss if the ticket price is set at $1,700? deadweight loss if the ticket price set at $1,700 As the demand of the ticket price set at $1,700=(8000+10000)/2=900 0.So, (1700-1500)(12000-9000) 2 =$300,000
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Q5.4c)
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