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.) Now suppose the Student Government Association of State U. is able to ram through a university bylaw making it illegal to charge students for tickets to university athletic events. To handle the allocation, the university administration imposes a student lottery. Every student's ID is put into the computer and 16,000 are randomly drawn, with tickets mailed to the lucky winners. Is this an efficient allocation? Explain. (Ignore any costs associated with mailing.)

Answer 1

In this scenario the supply is fixed where the university cannot provide more than 16000 seats for the football match. The demand for the tickets are more where supply is less, so there is a shortage of tickets.

To overcome this situation they have to keep price for the tickets , so that demand will decrease for the tickets. However the university bylaw states that is illegal to charge students for watching match. So they cannot charge the tickets.

Now University is allocating tickets random for lucky winners.So in these scenario any one can get ticket which means randomly 16000 people will be selected. It is best allocation because people will also keep pressure for tickets or create any problem as university is allocating tickets on random basis which they don't even know who will get those tickets.

So according to me this is an efficient allocation for the above scenario due to their limited options.