Question

The price of tickets for a Rolling Stones concert is $50. At that price, tickets sell out almost immediately. After tickets sell out, there are over 20,000 people who still want to buy tickets to the concert at the $50 price. It follows that:_________.

a. the market equilibrium price of tickets to the concert is $50.
b. the market equilibrium price of tickets to the concert is less than $50.
c. the market equilibrium price of tickets to the concert exceeds $50.
d. at the $50 price, there is a surplus of tickets on the market.
e. both (c) and (d).

Answer 1

c. the market equilibrium price of tickets to the concert exceeds $50

Step-by-step explanation:

Markets are at equilibrium when Market Demand = Market Supply and downward sloping demand curve, upward sloping supply curves intersect.

As mentioned : At Price = $50, demand of the product still exists after market clearing. This implies there is case of Excess Demand at prevalent price. This case happens when actual price < equilibrium price , because demand is more & supply less at lower prices

So: Actual price $50 is less than the market equilibrium price (which should be rather higher), equalising market demand & market supply - which should be rather higher.