Fig. 1 shows demand and supply for concert tickets before a charity concert. The organiser fixes a maximum ticket price below the equilibrium price, shown b...

Assessment: Economics 9214 | Paper 1 Mock 01 | Written Paper 1 Subject: Economics - 9214

Question 1 Report

Fig. 1 shows demand and supply for concert tickets before a charity concert. The organiser fixes a maximum ticket price below the equilibrium price, shown by the horizontal line Pmax.

SDPmaxPriceTickets© EAGLE BEACON GLOBAL

(a) State what is meant by a maximum price. [1]
(b) Explain why a shortage of tickets is likely at Pmax. [2]
(c) What is one non-price method the organiser could use to allocate scarce tickets? [1]

Answer Details

(a) A maximum price is a legal or imposed highest price at which a good may be sold. [1]

(b) At Pmax, which is below equilibrium, quantity demanded is greater than quantity supplied. More consumers want tickets than the organiser has available, so there is excess demand, also called a shortage. [2]

(c) The organiser could allocate the scarce tickets by queueing. A ballot, rationing or a limit on tickets per buyer would also be valid non-price methods. [1]

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