when excess demand exists for tickets to a major sporting event or a concert, profit opportunties...

when excess demand exists for tickets to a major sporting event or a concert, profit opportunties exist for scalpers. explain using supply and demand curves to illustrate this economic principle. do you agree or disagree that these scalpers are efficient and work to the advantage of everyone?

Expert Solution

When the excess demand exists for the tickets the demand curve will shift right from D to D¹ but the supply does not change.

As a result of the increase in demand or the existence of the excess demand the equilibrium price rises from P to P¹. The result has been shown in the diagram given below. Due to these raised prices the scalpers earn great profits by taking advantage of the increased demand.

I do not agree with the point that the scalpers efficiently work for the advantage of everyone . This is because as a result of scalping the supply of the tickets from the original ticket sellers decreases . As a result the consumers or the fans which are not in a condition to pay more are left back and cant purchase the tickets. The prices go up to very large extent and only the consumers who can pay very high can buy the tickets. The condition becomes like that of inflation where the value of money decreases because of the more payment for the ticket. Also the scalping is illegal because it illegally boosts up the demand just for the arbitrage opportunity and sake of earning huge profits and exploit the fans.

Rahul Sunny answered 2 years ago

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