Essay Response. Mathematics & Economics Assignment

Essay Response
Your Name
Subject and Section
Professor’s Name
December 17, 2019
4.1. Price Ceilings
The case at hand shows an excess in supply on the part of the tickets for the ‘mediocre team’ (MT) and an excess of demand on the part of the ‘powerhouse team’ (PT). On the one hand, it is said that the tickets for the mediocre team are being sold at reasonable price, but there is a lacking demand for the same. Going to the Supply and Demand Curve, this simply shows that the current pricing scheme for MT is producing a surplus. To reduce this, a price ceiling that reduces the price can be imposed until both the supply and the demand reaches equilibrium point. At this point there are neither excess = nor shortage on both the number of tickets and seats.
On the other hand, the PT tickets are being sold for a reasonable price, but there is an excess in demand. This simply means that there is shortage for these tickets. In relation to the Supply and Demand Curve, it could be seen that increasing the price would lead to a decrease in demand and a corresponding increase in the supply. Thus, this price floor can be imposed whereby the price of each individual ticket would be increased until the number of people who are willing to pay for the price would equal the available number of seats in the stadium.
All in all, this simply means that in order to reach equilibrium point between the two types of tickets, a pricing scheme that imposes a lower pr...