What is the total surplus for one show

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Reference no: EM133917377

Problem

This exercise will cover selling tickets for Adele's 2022-23 residence in Las Vegas. A challenge for venues hosting shows is to price their tickets correctly. If tickets are overpriced, sales will be limited. If tickets are underpriced, the venue & entertainer loses potential income. Tickets were initially list for a range of prices based on seat locations. We will focus on one show, section 4 tickets that were initially priced at $100/seat and there were 600 seats available. All seats were sold in the first 15 minutes available so initial pricing would be one extreme on the demand curve (D1) ($100/600 seats). There were a small # of tickets available after two weeks on a resale website for $400 (actually, > $1,000 but I want to make the graph smaller). This would be the other extreme on the demand curve ($400,0 units). The maximum # of seats available was 600 and this was offered at $100/seat so this would be one extreme of the supply curve (S1). The other extreme would be selling 0 seats for $0 ($0,0 units).

Graph the supply and demand curves using a scale on the y-axis of one line equals $25 and on the x-axis of 1 line equals 25 seats. Start both y-axis at and x-axis at 0. Once your graphs are complete, answer the following questions on the bottom of the graph paper:

I. Lightly shade and label (CS) the area that represent the consumer surplus for section 4 tickets for one show. How much is the consumer surplus?

II. Lightly shade a different color and label (PS) the area that represent the Productor surplus for section 4 tickets for one show. How much is the productor surplus?

III. What is the total surplus for one show? Get the instant assignment help.

IV. Assuming the same ticket behavior for the rest of Adele's residence, what is the total consumer surplus for her 24-show residence just for section 4 tickets (600 per show)?

Reference no: EM133917377

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