1.

From the newspaper came this story: "Record Number of Baseball

Fans Paid Higher Prices for Tickets." Explain how and why this
situation could occur. Provide one example of a time when you paid a
higher price than normal and explain why you did so. Don't forget that
this example can be a product or a service.
The reason many people are willing to pay higher prices is the game might
be interesting and the teams have famous baseball stars that everyone
waiting for so that’s why many people want to buy the tickets but the
stadium has limited seats so the demands are now bigger than supply. That
leads to the prices go up and people also buy it from the black market which
is more expensive than normal tickets. There’s one time I bought a concert
ticket for Rap Viet. I’m really into that show so when they have a concert I
decided to buy a Vip ticket just to see my favorite artists closer.
Unfortunately, many people bought it so the tickets sold out and that’s why I
had to buy the ticket from the black market which is much expensive than
normal tickets.
2. Identify a product that is crucial to our economic system. Explain the
supply and demand curve for that product.
A product that is crucial to the economic system can be petrol. Everyone
needs petrol for their automobile so they can travel. Also, petrol is also used
for machines in various industries. Even the prices go up, people still have to
buy it because it’s a need for them. That’s why the supply curve is normal
because the supply change according to the prices but the demand curve
does not change much even the prices go up or down because it’s a
necessity.
3. What is the Law of Diminishing Demand? Provide one example.
The Law of Diminishing Demand is when the prices go up then the
demand will go down and the opposite, when the prices go down the
demand will go up. For example, for hamburgers, the normal price
could be $3 but when the prices go up to $6, people don’t want to buy
it anymore but when the prices are lower to $2 it would encourage
people to buy it more.
4. Give an example of a product with an elastic demand and one with
inelastic demand. Explain each product and why you believe it is
elastic or inelastic.
An example of a product with an elastic demand is clothes because clothes
are substitute products since there are many choices for clothes so if the
prices of clothes go up, customers can shift to buy another cheaper clothes
brands so the prices decide it all for clothes. An example of inelastic is
healthcare. Medicine is a necessity for humans, it cures our sickness so it’s
 compulsory. Even the prices go up, people still have to buy it because it
helps them cure the sickness.

5. Explain equilibrium. Be specific and provide at least one example.

Equilibrium is the point that the supply curve and demand curve meet. That means
the quantity and prices of sellers offer is the prices and quantity that customers in
the market accept. For example, H&M sells 100 T-Shirts at $5 each and the
quantity demanded for those T-Shirts at $5 is also 100 because the customers need
T-Shirts and they think the prices are affordable so the T-Shirts sold out. It is when
the supply curve and demand curve meet at one point..

6. Conduct internet research to locate an illustration of a supply and

demand curve. Provide the link and a summary of the product or service in
the illustration and why this is a good example of the supply and demand
curve. Don't forget to cite your source (provide the link).

H&M’s supply curve is shifting to the left because of tax. The picture
illustrates that specific tax affected supply price so S1 shifted to S1+1.
When the product's price is higher then the product is taxed more heavily
so the supply curve shifting to the left. Furthermore, it means that at that
certain price now H&M can only afford to supply less than when there’s no
tax.
The picture shows the indirect tax with relatively elastic demand since the fashion
industry has many competitors. Because of the elastic demand so the price can
only raise to P1. Furthermore, we can see that the demand curve is very flat due
to its elasticity. The blue shaded is tax burdens for H&M and the stripped area is
tax burdens for customers.

“Government Intervention.” H&M, hmmarketstructure.weebly.com/government-

intervention.html.