It is very difficult to get a MIRROR’s concert ticket. Fans queued for a long time to buy one. With an aid of demand and supply diagram, explain how adjusting the ticket price can help. (L5)

Shortage exists in the market, therefore, consumers need to queue for a product.

The seller can raise the selling price to the market clearing price, P*. According to the law of demand, the higher the price of a good, the smaller its quantity demanded, other factors being constant. The quantity demanded will decrease after the price increased. The quantity demanded equals to the quantity supplied at P*, and the market is cleared.

(Vertical supply curve refers to the perfectly inelastic of supply, since the number of seats in a concert cannot be changed easily.)