Microeconomics Assignment Example | Topics and Well Written Essays - 1000 words

Microeconomics - Assignment Example As the supply decreases, demand is relatively constant leading to shortages in the market since demand exceeds supply. As a result, prices are hiked to maintain the equilibrium price and quantity. Thus, due to increased prices, the demand curve shifts to the left from D0 to D1 representing a decrease in the demand for beef. The supply of chicken is expected to increase that will make the supply curve to shift downwards representing an increase in supply. The demand is relatively constant but supply has increased establishing new equilibrium while reducing the price from P0 to P1. The reduced prices makes the demand curve to shift upwards from D0 to D1, representing an increase in demand for chicken. a) Ticket scalping is the resale of ticket prices in the secondary market. They are usually observed in entertainment and sporting events. The box office usually sets low prices for tickets hence creating excess demand in the market that cannot clear out (Rios, McConnell, & Brue, 2013). Thus, unlicensed and licensed members will buy more tickets at low prices and resell at relatively high prices to consumers so that the market can clear out. The original demand is the marginal revenue curve and represents the actual market clearing point. But scalpers intend to make profits and will purchase quantity Q2-Q1 at relatively low prices of P1. They will then resell the same quantity that is equivalent to average value corresponding to price P2. Thus, they will make more profit due to high prices. Therefore, instead of scalpers selling the tickets at equilibrium prices of P1, they sell at P2. This price is high for the consumers and will have to spend more if they are to acquire the ticket leading to welfare loss to the consumers. On the other hand, producer welfare is maximized since the tickets are sold at high prices than expected market prices leading to welfare gain to the producers. c) The tickets