Answer to Question #282052 in Microeconomics for Raj

Question

1. Lovers of classical music persuade Congress to impose

a price ceiling of $40 per concert ticket. As a result of

this policy, do more or fewer people attend classical

music concerts? Explain.

Answer 1

If the price ceiling of $40 per ticket is below the equilibrium price, then quantity demanded exceeds quantity supplied, so there will be a shortage of tickets. The policy decreases the number of people who attend classical music concerts, because the quantity supplied is lower because of the lower price.