Changes in Equilibrium?

n the fall of 2001, tickets for the Broadway play "The Producers" were sold out many weeks in advance. Theater owners complained about the profits made by ticket scalpers (people who bought tickets at the theater as soon as they went on sale, held them until just before the performance, and resold them to people who wanted to see the show on short notice). Some of these last-minute theatergoers, who were not able to buy tickets from the theater, agreed to pay the high prices charged by the scalpers. This account suggests that the price that the theater owners were charging was:



A. Not a major factor in determining the quantity demanded for tickets to the play

B. Above the equilibrium price

C. Below the equilibrium price

D. At the equilibrium price, because the number of tickets purchased always matches the number of seats in the theater

Answer:
Below the equilibrium price. (B) Because the owners thought the demand was lower than what the market called for (their demand curve was left of the real demand curve). So their equilibrium price was lower than the market.
Below equilibrium price. This is due to the fact that not only did the event sell out, but many people were willing to pay far above the price charged by the theater.

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