lesson 3 - The Core Concepts in this lesson are: Demand...

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The Core Concepts in this lesson are: Demand Supply Market Equilibrium Garth Brooks announced that he was going to put on a concert in Texas Stadium where the Dallas Cowboys play football. About 65,000 thousand seats were going on sale. The promoters announced the locations that would sell tickets at $17 and that they would go on sale on a particular Saturday at 8:00 A.M. They also announced that lines would not be allowed to form until 7:00 A.M. In addition the promoters stated that they would only sell 6 tickets to any one person. The tickets sold out in 93 minutes! The next day the newspaper reported that the price of those tickets had skyrocketed to over $300 on the "black-market." Garth went on the local Country-Western station and announced that he was not going to allow his fans to be "gouged" by speculators. He therefore would give a second concert the next night. The same procedure would be followed. The places that would sell tickets were announced. The lines could only form one hour before sales commenced and any person could only buy six tickets. This concert sold out in less than two hours. The next day there were reports that "ticket brokers were selling tickets for both concerts at $150. This made Garth even angrier and he returned to the radio and announced yet a third concert! His fans were not going to have to pay such high prices for tickets to see and hear him in person. This concert sold out very quickly following the same procedures. However, all of Garth's fans were not so happy. One group of fans, those that got tickets for the first concert, called the radio station and complained that they thought it unfair that they had tickets to the first concert and now there were going to be more concerts, and what added insult to injury, the third concert was going to be scheduled before the first (planned) concert because of scheduling availability of Texas Stadium. In addition, those scurrilous ticket brokers were still selling tickets to any of the three concerts for between $75 and $125 - depending on the seat location. Markets are places where buyers and sellers meet to engage in exchange. In the process of exchanging, they determine prices and quantities produced. The supply and demand model explains how buyers and sellers interact to determine prices and quantities. It is the most basic and widely used model in economics. 2 of 12 This work copyright © 2006-2009 by Dr. Ryan Amacher and the Center for Distance Education at the University of Texas at Arlington. Demand: Many things affect the demand for a good or service. As you well know, price is a very important determinant of demand. Thus, we focus first on what happens when the price of a good or service changes relative to the prices of other goods and services. While looking at the relationship between price and quantity demanded, economists hold constant everything else that affects
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demand. The law of demand states that the quantity demanded of a good or service in a given time period
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This note was uploaded on 01/13/2012 for the course ECON 2306 taught by Professor Kamara during the Spring '11 term at University of Texas at Austin.

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lesson 3 - The Core Concepts in this lesson are: Demand...

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