Question

11. Problems and Applications Q11

Suppose that the price of basketball tickets at your college is determined by market forces. Currently, the demand and supply schedules are as follows:

Price	Quantity Demanded	Quantity Supplied
(Dollars)	(Tickets)	(Tickets)
4	15,000	8,000
8	12,000	8,000
12	8,000	8,000
16	6,000	8,000
20	3,000	8,000

Use the blue points (circle symbol) to graph the demand for basketball tickets. Then use the orange points (square symbol) to graph the supply of tickets. Finally, use the black point (plus symbol) to indicate the equilibrium price and quantity in this market.

Original DemandSupplyOriginal EquilibriumNew DemandNew Equilibrium0246810121416182020181614121086420Price of Tickets (Dollars)Quantity of Tickets (Thousands)

Your college plans to increase total enrollment next year by 6,000 students. The additional students will have the following demand schedule:

Price	Quantity Demanded
(Dollars)	(Tickets)
4	5,000
8	4,000
12	3,000
16	2,000
20	1,000

Add the old demand schedule and the demand schedule for the new students to calculate the new demand schedule for the entire college. Use the purple points (diamond symbol) to draw this new demand curve on the previous graph. Then use the grey point (star symbol) to indicate the new equilibrium price and quantity.

Answer 1

11. The current demand and supply schedule is as below.

Price	Quantity Demanded	Quantity Supplied
4	15000	8000
8	12000	8000
12	8000	8000
16	6000	8000
20	3000	8000

The graph is as below.

The equilibrium price will be where the quantity demanded is equal to the quantity supplied, which is occurring at P=$12. There is excess demand for lower price and excess supply for greater price. The equilibrium quantity would be 8000 units.

The quantity demanded would be added per price as below.

Price	Quantity Demanded	Quantity Supplied
4	15000+5000=20000	8000
8	12000+4000=16000	8000
12	8000+3000=11000	8000
16	6000+2000=8000	8000
20	3000+1000=4000	8000

The graph is as below.

As under usual situation, the increase in quantity demand raised the equilibrium price to $16. Equilibrium quantity would not change.