Question

1. A prolific artist, Pablo Picasso (1881-1973) painted 1,000 paintings during what is known as his “Blue Period”, and all thousand paintings are on display and hanging in galleries throughout the world.
   a) Draw the supply curve for Picasso’s Blue period works. Why is this supply curve different from other ones you have seen that follow the Law of Supply?
   b) Given your answer to a), the price of a Blue Period painting will be entirely dependent on what factors? Draw a diagram showing how the price of such paintings will be determined.
   c) Suppose rich art collectors decided that it is essential to acquire Picasso Blue period art for their collections. Show in a diagram the impact on the market for these paintings.

Answer 1

Solution:-

Given that

A prolific artist, Pablo Picasso (1881-1973) painted 1,000 paintings during what is known as his “Blue Period”, and all thousand paintings are on display and hanging in galleries throughout the world.

a)

As supply is fixed at 1000 paintings, so supply curve will be vertical parallel to y-axis

According to law of supply, price and quantity supplied are directly related, other things being constant. So supply curve is upward sloping which is different from supply of paintings which is vertical parallel to y-axis

b)

Given above supply curve, price of a painting will depend on demand si whatever factors affect demand will affect price.

Factors:

Income of the consumer, taste of consumer price of related goods and vebler effect in which consumers hold luxirious or costlier goods just to show off.

c)

If Rich art collectors decided that it... collections then it will lead to increase in Demand due to factors other than price therefore Demand will shift to right and price will increase as supply is fixed.

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