Question

Make standard assumptions, including all markets in this question are perfectly competitive and unless otherwise stated, no curve is perfectly vertical or horizontal. The limited number of tickets offered for sale for the basketball game are quickly purchased. Then, the worsening of a global pandemic increases the likelihood of catching a potentially fatal illness when indoors in a large group. What is the predicted effect of this on the price and quantity in the re-sale market for tickets to the game?

a. price decreases. quantity decreases

b. price decreases. quantity may increase or decrease.

c. price may increase or decrease. quantity decreases.

d. price may increase or decrease. quantity increases.

e. price may increase or decrease. quantity may increase or decrease.

Answer 1

As seen from the graph, before the pandemic, The quantity demanded was Q1 and the Price was P1.

However after the pandemic struck, the Curve of Quantity demanded shifted inwards as demand decreases, however supply curve would stay the same.

Since it caused an inward shift, the price reduced to P2 and the Quantity reduced to Q2.

Hence Option (a.) price decreases. quantity decreases.