The Hamsterville Hatchetfish football team's home stadium is Deep Sea Stadium. Fans of the team were angry about high prices to football games at the stadium and successfully petitioned the government to impose a price ceiling of $\$ 45$ per ticket. Previously, tickets sold for $\$ 75$ dollars. Deep Sea Stadium sells out every game even before the price of tickets was lowered.

What is a likely consequence of this price ceiling?
Choose 1 answer:
(A) The opportunity cost of attending a game will decrease
(B) A black market may develop
(C) All fans will benefit from the new lower price
(D) More people will be able to attend football games
(E) Amenities at Deep Sea Stadium will improve

Question

The Hamsterville Hatchetfish football team's home stadium is Deep Sea Stadium. Fans of the team were angry about high prices to football games at the stadium and successfully petitioned the government to impose a price ceiling of $\$ 45$ per ticket. Previously, tickets sold for $\$ 75$ dollars. Deep Sea Stadium sells out every game even before the price of tickets was lowered.

What is a likely consequence of this price ceiling?
Choose 1 answer:
(A) The opportunity cost of attending a game will decrease
(B) A black market may develop
(C) All fans will benefit from the new lower price
(D) More people will be able to attend football games
(E) Amenities at Deep Sea Stadium will improve

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Price Ceiling: A price ceiling is a government-imposed limit on the price charged for a product. ‖ ‖ b ⋮ Market Effects of Price Ceiling: When a price ceiling is set below the equilibrium price, it typically leads to a shortage as the quantity demanded exceeds the quantity supplied at that price. ‖ ‖ c ⋮ Analysis of Given Scenario: Given that Deep Sea Stadium sells out every game even before the price of tickets was lowered, it indicates that the demand is high and the quantity demanded at the price ceiling will exceed the quantity supplied. ‖ ‖ d ⋮ Likely Consequences: The likely consequence of the price ceiling would be the development of a black market, as the shortage created by the price ceiling will encourage some consumers to pay a price higher than the ceiling to obtain tickets. ‖ ∻Answer∻ ⚹ (B) A black market may develop ⚹ ∻Key Concept∻ ⚹ Price Ceiling Consequences ⚹ ∻Explanation∻ ⚹ A price ceiling set below the equilibrium price can lead to a shortage and the development of a black market as consumers are willing to pay more to obtain the product. ⚹◊What impact would the price ceiling on football game tickets at Deep Sea Stadium have on consumer surplus in the market?⍭ Generate me a similar question◊

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