Question

State University has student demand for its football tickets of

Q = 20 - (1/2)P

where Q is the number of tickets in thousands and P is the price per ticket. Because of commitments to alumni and wealthy donors, State U. has only 16,000 student seats available, a fixed supply. (Remember, the horizontal axis should be thousands of tickets.)

Suppose the administrators of State U. decide to let the market allocate the student tickets? Graphically depict this outcome and attach your graph in a file.

Answer 1

Demand function is given by Q = 20 - (1/2)P, Q is in thousands.

Supply is fixed at 16,000 student seats or tickets which implies Qs = 16 (fixed). This implies at the market equilibrium Qs = Qd = 16 or 20 - (1/2)P = 16. This gives (1/2)P = 4 or P = $8 per ticket.

Market price of ticket is $8 and total tickets demanded and supplied is 16,000.

48 40 32 24 16 0 0 246 8 10 12 14 16 18 20 Quantity (in thousands tickets) Demand -Supply