Question

A large group of fans are upset about the high price of tickets to many events. As a result of their lobbying efforts, a new law caps the maximum ticket price to any sporting event at $50. Assume there are a fixed amount of seats in the stadium, all seats are available to be sold, and the price of tickets before the ceiling was at an equilibrium point above $50. The price ceiling will create a ___________ of tickets, which will be greater if demand is more _______________, and _________ people will attend the events.

a. surplus; elastic; more
b. shortage; inelastic; fewer
c. shortage; elastic; the same number of
d. surplus; elastic; fewer

Answer 1

c. shortage; elastic; the same number of

Step-by-step explanation:

If the prices were at an equilibrium point above $50, applying a price cap will cause a shortage of tickets since more people will seek to buy them since they are below the equilibrium price. If demand is more elastic, there is larger increase in demand in response to a decrease in prices, thus, aggravating the shortage. Since the price of tickets before the ceiling was at an equilibrium point, it is fair to assume that all tickets were sold. Therefore, the same number of people will attend the events.

The answer is c. shortage; elastic; the same number of.