What will happen in this case is that someone is

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Unformatted text preview: ium ticket price (for this particular concert) is $60, but the initial ticket seller sells tickets for only $40. What will happen in this case is that someone is likely to buy a ticket (or two, or three, or four) for $40 and then resell the ticket for $60, for a profit of $20 per ticket. Now ask yourself whether this buying and reselling of tickets would happen if all tickets were sold for $60 in the first place. The answer is no. Lesson learned: Scalpers (people who buy and resell tickets at higher prices) will only exist if the good in question was not originally sold at its equilibrium price. Look around you. You don’t see scalpers when it comes to milk, computers, rugs, shirts, turkey sandwiches, or cups of coffee. No person stands outside a coffee shop and offers to sell you a cup of coffee for $2 more than you can pay for a cup of coffee inside the shop. The reason you don’t see any scalpers in these cases is because the prices of the goods are at equilibrium. Still, you will see a scalper for a rock concert, or some sporting events, or even some plays. Why? Because in these cases, the price initially charged for these Rock Concert Ticket Price Ticket Price $60 $40 D 0 QUESTION: At a concert I attended last 6 -6 S Price 06 (128-153) EMC Chap 06 10,000 The seller of rock concert tickets sells 10,000 tickets at a price of $40 each. At this price, a shortage occurs; the seller charged too low a price. A price of $60 per ticket would have achieved equilibrium in the market. 12,500 Number of tickets events was below the equilibrium price; that is, the price was below the price at which quantity demanded equals quantity supplied. The Difference in Prices for Candy Bars, Bread, and Houses In general, no matter where you go in the United States, the price of a candy bar (pick your favorite brand) is approximately the same. A candy bar in Toledo, Ohio, is approximately the same price as a candy bar in Miami, Florida. This consistency is true for the most part for many other goods, such as a loaf of bread, for example. But is it true for all goods? What about real estate prices—in particular, the price of a house in San...
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This document was uploaded on 01/16/2014.

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