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Fans scramble for Lady Gaga tickets Summary of the news Lady Gaga is going to hold two concerts on May 2nd and 3rd at Asia World-Expo in Hong Kong. Thousands of little monsters (Lady Gaga’s fans) scramble for the tickets and queue up outside Tom Lee Music to snatch a ticket for the Born This Way Ball. Many people are tempted to queue to buy the tickets and some want to resell them to earn money. Introduction In this news, we are going to apply a few economic concepts to explain this phenomenon. They are scarcity, opportunity cost and excess demand. Scarcity --- Limited resources are not enough to satisfy unlimited wants. Opportunity cost --- Cost expressed in terms of the highest-valued option forgone. Excess demand --- The quantity demanded is higher than the quantity supplied at the prevailing price. Economic Analysis First, AsiaWorld-Arena has a maximum capacity of 14000 seats, which means the supply of the tickets is fixed, while the wants of fans are more than 14000 tickets. The Production Company sets the maximum number of tickets that each buyer can purchase at 8. .This shows that the concert tickets are economic goods. The quantity is not sufficient to satisfy all human wants, more is preferred to less and scarcity occurs. The buyers have to compete for the tickets and thus competition is required to allocate them. Competition is the process of resolving inter-personal conflicts for economic goods (concert tickets). In this case, the non-price competition i.e. first -come -first-served is involved. The winners are those who arrive at the ticket office earlier while the late comers are discriminated against. This shows that scarcity implies competition and discrimination. Under scarcity, competition and discrimination are inevitable in a society. Before the date the tickets went on sale, there was already a big queue lining up outside the ticket office overnight. Most of the people were housewives and South Asian people. Maybe you will think that it’s strange that Lady Gaga’s fans are housewives instead of youngsters. Actually the aim of the housewives and the South Asian people was to earn money. Secondary markets, which are also called scalpers, will make a profit from the difference between the fixed ticket price and the market price. Speculation on the concert tickets is very common in Hong Kong. P. 1 Apart from the public sale, there is an internal booking. For people who buy the tickets through an internal booking, their opportunity costs in terms of money are higher than those who buy in the ticket office as they need to pay an additional charge HK$205 to the show promoter Live Nation and a HK$10 handling fee charged by ticketing agent HK Ticketing. Must the existence of scalpers be harmful to the consumers? Most of the consumers think that scalpers are harmful to them as they resale the tickets at a much higher price. In fact, the scalpers exist due to the excess demand caused by the under pricing in the market. A higher ticket price paid to the scalpers ensures the allocation of tickets to the highest value users. Why don’t working people queue up for the tickets to earn money? If the working people queue up for the tickets, the opportunity cost is not only the money price of the concert tickets but also the time cost --- the highest-valued alternative use of the time to work. Their income forgone is higher than the housewives and South Asian people. Moreover, if the working people queue overnight, they will not get enough as their working efficiency is affected. Therefore, we can hardly see any business people queue up for the tickets. Now, we are going to analyze the concept of excess demand .We will take the $1280 ticket as an example. As shown in the graph, the price of the concert ticket is $1280 which is much lower than the equilibrium price (P*). The supply curve is vertical because the supply of the concert tickets is fixed which is unchanged. In this case, we can see that the amount of the tickets available cannot satisfy the quantity demanded of people, as the supplier will only hold two concerts in Hong Kong. When the price of the concert ticket is $1280, the quantity demanded (Qd) is much higher than the quantity supplied, 10000 of the tickets. The difference between the quantity demanded and 10000 tickets is the excess demand. P. 2 On the first day of the sale of concert tickets, there was a long queue waiting outside the ticket office. All the tickets were sold within 30 minutes, but still many people couldn’t buy the tickets. The reselling price of a ticket has been raised to more than $10000, which is nearly 10 times the original price. It is evident that the price of tickets is lower than the equilibrium price, which leads to the shortage of the tickets. How to solve the excess demand? Due to the excess demand, the supplier has decided to hold four more concerts to ease the shortage of the tickets. Here is a diagram after the supplier holds the extra concerts. From the diagram, we can see that the supply curve shifts to the right from S to S1, as the supplier holds four more concerts, so it increases the supply of the tickets from 10000 to 40000 tickets. Also, the equilibrium price decrease from P* to P1 and the amount of the excess demand also decreases. In addition, the resale price of the concert tickets in the secondary market also drops. Scalpers gain less than before or some even face losses. Also, after holding the extra concerts, the supplier decided the tickets could only be bought through the customer service hotline and the internet booking. The maximum quantity of tickets that the people can buy has changed from 8 to 4 to whack the scalpers and let the “real little monsters” benefit from it. P. 3 Conclusion To conclude, if the goods are economic goods, the problem of scarcity will occur. If we want to get the economic goods, we have to forgone something, either money or time costs. We think that the supplier has used many ways to solve the shortage of the tickets, such as holding four more concerts and increasing the price of the tickets through the internal bookings to allow more tickets for public sale. In fact, holding more concerts can benefit both the supplier and consumers. The supplier may make more profits and more consumers can enjoy the concerts. However, the costs of the supplier also increase such as payments to Lady Gaga and the rental of Asia World-Expo. Some consumers may attend all the concerts and increase their expenditure. For the scalpers, they cannot sell the tickets at higher prices as the supply of concerts increases. This shows that having extra concerts will benefit the supplier and consumers but not the scalpers. P. 4