Chapter 4, Problem 2QFT

To determine

Referring to the diagram in response to question 1, explain the effect of resellers on the allocation of consumers’ surplus and producer surplus among Jay-Z and Beyoncé and their fans.

1. Through a diagram and using the concepts of consumer and producer surplus, the allocation of surplus between singers and their fans in presence of ticket resellers.

Concept Introduction:

Consumer Surplus:

The difference between the amount that a consumer is willing to pay for a unit of a product and the amount the customer actually pays.

Producer Surplus:

The difference between the price that the supplier offers and the minimum price at which the producer is willing to supply a unit of a product.