Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 3, Problem 4CQ
To determine
The difference between total value and marginal value.
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Students have asked these similar questions
Are prices an accurate measure of a good's total value? Are prices an accurate measure of a good's marginal value? What's the difference?
Can you think of a good that has a high total value but low marginal value?
Use this concept to explain why professional wrestlers earn more than nurses, despite the fact that it is almost certain that nurses create more total value for society than wrestlers.
When excess demand exists for tickets to a major sporting event or a concert, profit opportunities exist for scalpers. The table below indicates the
quantities demanded at various prices, fill in the values for the supply curve for tickets to a sold-out venue that holds 20,000 people.
Price per
Ticket
Quantity of Tickets
Demanded
Quantity of Tickets
Supplied
20,000
$50
45,000
100
40,000
20,000
150
35,000
20,000
200
30,000
20,000
250
25,000
20,000
300
20,000
350
15,000
20,000
20,000
The fact that there is a face-value price of $50 per ticket could be illustrated on a graph as a horizontal line at $50
The equilibrium price that will prevail in the market if scalpers are allowed to operate in the black market would be $ 300 per ticket.
The quantity of tickets demanded at the face-value price is 45,000 tickets.
For this example, a shortage of
tickets exists at the face-value price.
An increase in the supply of a good is expected to have what effect on its price? What will be the effect on the demand for substitutes?
Chapter 3 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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Similar questions
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- If the price of X decreases and this decreases the demand for Y, thenarrow_forwardDraw a correctly labeled graph showing the demand for apples. On your graph, illustrate what happens to the demand for apples if a new report from the Surgeon General finds that an apple a day really does keep the doctor away.arrow_forwardAccording to the readings, which of the following would likely NOT occur if college athletes could be paid in competitive markets? a. College coaches would earn lower salaries b. Subsidies from the academic side could increase c. Ticket prices would rise to cover the players’ salaries (assuming fan demand is unchanged) d. Fewer universities would have football programsarrow_forward
- Price P₂ P₁ Q₂ ↓ D Quantityarrow_forwardHurricane Sandy to Raise Prices on Used Cars The immediate impact of Hurricane Sandy was devastating, and the storm's ripple effects will continue to be felt in the weeks and months ahead as communities work to recover. One side effect becoming apparent is Sandy's influence on the used car market. According to the Detroit Free Press, the destruction of some 250,000 vehicles has led to a shortage that could affect late-model used vehicle prices nationwide. The National Auto Dealers Association estimates that prices could increase 0.5% to 1.5%. That may not seem like much (550-S175 per vehicle), but Edmunds.com suggests that in the short term, prices could jump $700 to $1.000. Source: George Kennedy, Autoblog, November 10, 2012. © 2012 AOL Inc. All rights reserved. Market for Used Cars Post-hurricane Supply 23000 Pre-hurricane Supply 22000 21000 20000 Market Demand 19000 18000 6000 7000 8000 9000 10000 11000 Quantity (cars per day) Based on the News Wire, a. What is the initial…arrow_forwardThe table below shows Tom's demand schedule for web tutoring before and after winning the lottery. Use the data provided to answer the following questions: Quantity Demanded (Hours per Semester) Price (per Initial Quantity After Increase Hour) Demanded in Income $50 1 8 45 2 9 40 3 10 35 5 12 30 7 14 25 9 16 20 19 22 15 10 27 12 15 20 Instructions: Enter your responses as a whole number. At what price would Tom buy 12 hours of web tutoring? a. Without a lottery win. per hour b. With a lottery win. per hourarrow_forward
- This is the market for steer. Steer are processed into 1 hide and 1 beef. Initial Demand for hides: Q = 70 -P Initial Demand for beef: Q = 100- 0.5P Market supply for steer: Q =-35 + 0.5P New Scenario: The demand for beef rises. People are now willing to pay 80% more than what they used to pay for beef. Hints: you must correctly calculate the new equation for hides to get this question correct. If you feel stuck, try some prices with the original demand for beef and your new demand for beef. Are people willing to pay 1.8 tim as much for each quantity of beef? If so, you have correctly calculated your new Deef Curve. • For example, with the initial demand, people are willing to pay $160 for 20 beef and $100 for 50 beef. the new scenario, the new demand curve needs to show that people are now willing to pay $288 for 20 beef and $180 for 50 beef. a) Calculate new market Q and P for steer b) Calculate new market Q and P for hides c) Calculate new market O and P for beefarrow_forwardA website offers a place for people to buy and sell emeralds, but information about emeralds can be quite imperfect. The website then enacts a rule that all sellers in the market must pay for two independent examinations of their emerald, which are available to the customer for inspection. How would you expect this improved information to affect demand for emeralds on this website? How would you expect this improved information to affect the quantity of high-quality emeralds sold on the website?arrow_forwardIdentify the correct statement. Group of answer choices Demand for a product is the same as the quantity demanded of a product. Demand is the quantity of a product that producers are willing to produce at a particular price. Demand is the total quantity of a product that people are willing, even if unable, to purchase at a given price. Demand is the quantity of a product that people are willing and able to purchase at different prices. Demand represents the different quantities of a good or service that provides consumers the same amount of utility.arrow_forward
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