Answer to Question #124831 in Economics for Mohd Hafiz

Question

Billy is a star player for the Los Angeles Lakers basketball team. He is close to breaking the major league record 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 diagrams to explain the following. a) Show the case in which this announcement results in a lower equilibrium price and a lower equilibrium quantity than before the announcement. b) Show the case in which this announcement results in a lower equilibrium price and a higher equilibrium quantity than before the announcement

Answer 1

a) without Billy less people will go to the game.

b) without Billy those, who wanted to see him, will not go. In the same time,

fans of the other team will go to the game hoping to see their team win.