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Chapter 3: Problem 14

Will Shakespeare is a struggling playwright in sixteenth-century London. As the price he receives for writing a play increases, he is willing to write more plays. For the following situations, use a diagram to illustrate how each event affects the equilibrium price and quantity in the market for Shakespeare's plays. a. The playwright Christopher Marlowe, Shakespeare's chief rival, is killed in a bar brawl. b. The bubonic plague, a deadly infectious disease, breaks out in London. c. To celebrate the defeat of the Spanish Armada, Queen Elizabeth declares several weeks of festivities, which involves commissioning new plays.

Short Answer

Expert verified
Answer: The death of Christopher Marlowe increases demand for Shakespeare's plays, resulting in a higher equilibrium price and quantity. The outbreak of the bubonic plague decreases demand for his plays, leading to a lower equilibrium price and quantity. Queen Elizabeth declaring several weeks of festivities increases demand for his plays, leading to a higher equilibrium price and quantity.

Step by step solution

01

1. Draw the initial supply and demand graph for Shakespeare's plays

First, let's draw the initial supply and demand diagram for the market for Shakespeare's plays by plotting the supply curve (S) and the demand curve (D) on the same graph. The intersection of both curves corresponds to the initial equilibrium price (P0) and quantity (Q0) for his plays.
02

2. Analyze the effect of Christopher Marlowe's death on the market

As Christopher Marlowe was Shakespeare's chief rival, his sudden death would decrease the supply of plays from other playwrights. With less competition, the demand for Shakespeare's plays should increase. Consequently, the demand curve for his plays shifts to the right (D' curve). The new equilibrium price (P1) will be higher, and so will the new equilibrium quantity (Q1).
03

3. Analyze the effect of the bubonic plague on the market

The outbreak of the bubonic plague will likely decrease the demand for plays as people avoid public gatherings for fear of infection. This will cause the demand curve for Shakespeare's plays to shift to the left (D'' curve), resulting in a lower equilibrium price (P2) and a lower equilibrium quantity (Q2) for his plays.
04

4. Analyze the impact of Queen Elizabeth's declaration of festivities on the market

Queen Elizabeth's decision to commission new plays as part of several weeks of festivities will increase the demand for Shakespeare's plays. The demand curve will shift to the right (D''' curve), leading to a higher equilibrium price (P3) and a higher equilibrium quantity (Q3) for his plays. In conclusion, each event affects the equilibrium price and quantity in the market for Shakespeare's plays differently. Marlowe's death and the celebration of Queen Elizabeth led to an increase in demand, while the outbreak of the bubonic plague decreased demand for his plays. In each situation, the market's equilibrium price and quantity adjusted accordingly.

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