Question

Suppose that Rihanna sells​ 1,000 tickets to a concerts at​ $480 each. If the equilibrium price is​ $600 per ticket for a fixed supply of​ 1,000 tickets, what is the value of the additional economic rent that Rihanna could earn if she charged the market clearing​ price?

Answer 1

Answer:

$120,000

Explanation:

Calculation of the value of the additional economic rent that Rihanna could earn if she charged the market clearing​ price

The first step to find the total amount of the tickets that Rihanna sold

Since we were told that she sells 1,000 tickets to a concert at $480, this means the total amount will be:

Total amount = 1,000 * $480

= $480,000.

Since the Supply is fixed for 1,000 tickets and equilibrium price per each ticket is $600 which means the total amount will be calculated as :

Total amount = 1,000 * $600

= $600,000.

The last step is to find the additional economic rent

Additional economic rent=$600,000 - $480,000

Additional economic rent=$120,000.

Therefore the value of the additional economic rent will be $120,000