The market for concert tickets to see the pop singer Pink has the following supply and demand curves: Supply: P = 20 + 0.0015Q Demand: P = 500 – 0.0025Q Initially, the market is in equilibrium at P = $200, Q = 120,000. Questions 21 to 24 concern this market. 21. The government places a $35 per unit tax on the buyers of concert tickets. At the new equilibrium, the price paid by buyers (including the tax paid and to the nearest cent) will be: A) $200 B) $201.67 C) $205 D) $235 E) $205.83 F) $221.88 G) $186.88 H) $165 I) $278.13 J) None of the above 22. Now suppose that the government alters its policy so that the $35 per unit tax is now placed on the sellers of concert tickets instead of on the buyers. Economic theory tells us the following: A) the buyers’ share and the sellers’ share are reversed by the change in policy B) the buyers’ share and the sellers’ share are not affected by the change in policy C) the shares are affected by the change in policy, but exactly how depends on the elasticities D) the shares are affected by the change in policy, but exactly how depends on excess demand E) the shares are affected by the change in policy, but exactly how depends on excess supply F) the shares are affected by the change in policy, but exactly how depends on utility G) the excess burden (or deadweight loss) of the tax increases H) we are unable to tell what will happen without additional information I) the elasticity of supply will increase J) none of the above 23. Now suppose no tax is charged on concert tickets, so we are back to the original equilibrium. The singer Pink decides to offer a tribute to her fans, so she orders the concert organizers to charge a price of only $50 per ticket. However, there are only the same number of seats available, so quantity is unchangeable. As a result the consumer surplus: A) rises by $9.5 million B) falls by $9.5 million C) rises by $18 million D) falls by $18 million E) rises by $8.5 million F) falls by $8.5 million G) is unchanged H) rises by $8 million I) falls by $8 million J) is smaller than the producer surplus

The market for concert tickets to see the pop singer Pink has the following supply and demand curves: Supply: P = 20 + 0.0015Q Demand: P = 500 – 0.0025Q Initially, the market is in equilibrium at P = $200, Q = 120,000. Questions 21 to 24 concern this market. 21. The government places a $35 per unit tax on the buyers of concert tickets. At the new equilibrium, the price paid by buyers (including the tax paid and to the nearest cent) will be: A) $200 B) $201.67 C) $205 D) $235 E) $205.83 F) $221.88 G) $186.88 H) $165 I) $278.13 J) None of the above 22. Now suppose that the government alters its policy so that the $35 per unit tax is now placed on the sellers of concert tickets instead of on the buyers. Economic theory tells us the following: A) the buyers’ share and the sellers’ share are reversed by the change in policy B) the buyers’ share and the sellers’ share are not affected by the change in policy C) the shares are affected by the change in policy, but exactly how depends on the elasticities D) the shares are affected by the change in policy, but exactly how depends on excess demand E) the shares are affected by the change in policy, but exactly how depends on excess supply F) the shares are affected by the change in policy, but exactly how depends on utility G) the excess burden (or deadweight loss) of the tax increases H) we are unable to tell what will happen without additional information I) the elasticity of supply will increase J) none of the above 23. Now suppose no tax is charged on concert tickets, so we are back to the original equilibrium. The singer Pink decides to offer a tribute to her fans, so she orders the concert organizers to charge a price of only $50 per ticket. However, there are only the same number of seats available, so quantity is unchangeable. As a result the consumer surplus: A) rises by $9.5 million B) falls by $9.5 million C) rises by $18 million D) falls by $18 million E) rises by $8.5 million F) falls by $8.5 million G) is unchanged H) rises by $8 million I) falls by $8 million J) is smaller than the producer surplus

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 15PAE

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21-24. The market for concert tickets to see the pop singer Pink has the following supply and demand curves: Supply: P = 20 + 0.0015Q Demand: P = 500 – 0.0025Q Initially, the market is in equilibrium at P = $200, Q = 120,000. Questions 21 to 24 concern this market. 21. The government places a $35 per unit tax on the buyers of concert tickets. At the new equilibrium, the price paid by buyers (including the tax paid and to the nearest cent) will be: A) $200 B) $201.67 C) $205 D) $235 E) $205.83 F) $221.88 G) $186.88 H) $165 I) $278.13 J) None of the above 22. Now suppose that the government alters its policy so that the $35 per unit tax is now placed on the sellers of concert tickets instead of on the buyers. Economic theory tells us the following: A) the buyers’ share and the sellers’ share are reversed by the change in policy B) the buyers’ share and the sellers’ share are not affected by the change in policy C) the shares are affected by the change in policy, but exactly how depends on the elasticities D) the shares are affected by the change in policy, but exactly how depends on excess demand E) the shares are affected by the change in policy, but exactly how depends on excess supply F) the shares are affected by the change in policy, but exactly how depends on utility G) the excess burden (or deadweight loss) of the tax increases H) we are unable to tell what will happen without additional information I) the elasticity of supply will increase J) none of the above 23. Now suppose no tax is charged on concert tickets, so we are back to the original equilibrium. The singer Pink decides to offer a tribute to her fans, so she orders the concert organizers to charge a price of only $50 per ticket. However, there are only the same number of seats available, so quantity is unchangeable. As a result the consumer surplus: A) rises by $9.5 million B) falls by $9.5 million C) rises by $18 million D) falls by $18 million E) rises by $8.5 million F) falls by $8.5 million G) is unchanged H) rises by $8 million I) falls by $8 million J) is smaller than the producer surplus

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