Assume the average price available on eBay for a certain Broadway show is $100.00. Then the...

Assume the average price available on eBay for a certain Broadway show is $100.00. Then the New York Times publishes a very favorable article about the show, and the number of people searching eBay for a ticket to this show increases dramatically. However, because the show is so "hot," there is no increase in the number of sellers on eBay.

Assume we are not in a COVID 19 world, so the theatres are still open. What will happen in the eBay market for tickets for this show?

Group of answer choices

a.Demand increases but the quantity supplied does not, creating a shortage

b.Demand increases and the quantity supplied increases, resulting in higher prices

c.Demand increases but the quantity supplied does not, creating a surplus

d.Nothing, since $100 is the stated price on the ticket, prices will always be available on eBay at $100

Solutions

Expert Solution

Answer - Option A

Demand increases but the quantity supplied does not , creating a shortage.

The favourable publication boosted the demand and supply did not rise due to no new seller. Thus it would create a shortage in the market . Surplus is when supply is more than demand which is not happening here. Hence option A will be correct.

Rahul Sunny answered 2 years ago

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