Aaron Hank is a star hitter for the Bay city baseball team. He is close to breaking the major league record for home runs hit during one season, and it is widely anticipated that in the next game he will break that record. As a result, tickets for the team ‘s next game have been a hot commodity. But today it is announced that due to a knee injury, he will not, in fact, play in the team’s next game. Assume that season ticket-holders are able to resell their tickets if they wish. Use supply and demand diagram to explain your answers to parts a and b. Show the case in which this announcement results in a lower equilibrium price and a lower equilibrium quantity than before the announcement. Show the case in which this announcement results in a lower equilibrium price and a higher equilibrium quantity than before the announcement. What accounts for whether case a or case b occurs? Suppose that a scalper had secretly learned before the announcement that Aaron Hank would not play in the next game. What actions do you think he would take? Concept Introduction: Demand: The demand is defined as the ability to pay for goods and services. Supply: The supply is the ability of the seller to produce the goods and services and sell it at the prevailing price Demand curve: Demand curve is the graphical representation of the demand schedule. Supply curve: Supply curve is the graphical representation of the supply schedule

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Chapter 3, Problem 10P

To determine

Aaron Hank is a star hitter for the Bay city baseball team. He is close to breaking the major league record for home runs hit during one season, and it is widely anticipated that in the next game he will break that record. As a result, tickets for the team ‘s next game have been a hot commodity. But today it is announced that due to a knee injury, he will not, in fact, play in the team’s next game. Assume that season ticket-holders are able to resell their tickets if they wish. Use supply and demand diagram to explain your answers to parts a and b.

Show the case in which this announcement results in a lower equilibrium price and a lower equilibrium quantity than before the announcement.

Show the case in which this announcement results in a lower equilibrium price and a higher equilibrium quantity than before the announcement.

What accounts for whether case a or case b occurs?

Suppose that a scalper had secretly learned before the announcement that Aaron Hank would not play in the next game. What actions do you think he would take?

Concept Introduction:

Demand: The demand is defined as the ability to pay for goods and services.

Supply: The supply is the ability of the seller to produce the goods and services and sell it at the prevailing price

Demand curve: Demand curve is the graphical representation of the demand schedule.

Supply curve: Supply curve is the graphical representation of the supply schedule

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