The following questions refer to the Planet Money podcast ”Kid Rock vs The Scalpers”.
a. What is the product and who are the market participants?
b. Kid Rock seems to feel very strongly about the price of the tickets offered in his concerts. How are the prices related to supply and demand? Are the prices at an equilibrium?
c. Why was one of the solutions proposed by Kid Rock increasing the number of shows? Draw a graph explaining your answer.
d. Draw a graph illustrating the consumer surplus region and its meaning for the story. In particular, do you think consumers derive a large value from the pricing schemes introduced by Kid Rock? Illustrate the effect of scalpers to the consumer surplus region. That is, how much surplus is derived by consumers when scalpers are allowed to buy lower-priced tickets and resell those to the public at higher prices?