Question

a) This activity is another application of demand and supply:

The Milwaukee Brewers are playing their arch-rival Chicago Cubs. Bleacher tickets for the game are sold out, and many more fans would attend if tickets were available.

Draw the demand and supply lines for bleacher tickets for this game. Label the equilibrium bleacher price and the current bleacher price. (Hint: You can use the Word draw program to draw a demand and supply line.) Label the equilibrium price and whether the actual price is above or below equilibrium.

Did the Brewers use the optimum pricing policy for bleacher seats? Explain. If not, explain.

What is the main rationing mechanism to allocate tickets for the game?

Answer 1

Bleacher tickets for the game are sold out, and many more fans would attend if tickets were available. This implies that currently the price is not market clearing and there must be a shortage of tickets at the current price. This shows that current price lies below the market clearing price. In this sense Brewers did not use the optimum pricing policy for bleacher seats because an equilibrium price should have balanced demand and supply

Under the current situation, a rationing mechanism can be used to allocate tickets for the game based on willingness to pay. Those with higher willingness to pay should get the tickets first. As the tickets are sold out these can be sold to consumers with lower willingness.