Impact of Policies on the Entertainment and Food Markets

Running head: ECONOMICS
Economics
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1ECONOMICS
Table of Contents
Exercise 1...................................................................................................................................2
Exercise 2...................................................................................................................................4
Answer A...............................................................................................................................4
Answer B................................................................................................................................5
References..................................................................................................................................7

2ECONOMICS
Exercise 1
In a perfectly competitive market, equilibrium is determined from the independent
forces of demand and supply. Neither buyers nor sellers can influence market price. Changes
in the demand, supply condition in the market results in a change in equilibrium condition
and there is an associated change in market price and market price. Policies taken by
government or other authority might affect demand or supply1. It is given that structure of
entertainment sector is perfectly competitive. Now, General Entertainment Authority has
announced to launch a national program with the objective of discovering talents under the
program named “Entertainment Challenges”.
In the entertainment sector, common people or spectators generates the demand. The
supply on the other hand is determined from the artists and programmers participating in
various entertainment program. The new program aims to develop, discover and enable the
best talents to reach the world - class level. The program also involve monetary prizes. The
winning contestants are to receive total of SR20m for training program, which will enhance
their talents. The entertainment challenges cover different fields like song, comedy, poetry,
circus, graphic arts, motorbikes shows, cookery shows and other. The program thus likely to
increase supply of fresh talents in the industry. As the supply increases, the supply curve of
entertainment sector moves to the right. The equilibrium moves down along the demand
curve2. Equilibrium quantity in the entertainment sector increases while equilibrium price
decreases. The impact of proposed policy on the entertainment industry is shown below.
1 Baumol, William J., and Alan S. Blinder. Microeconomics: Principles and policy. Nelson Education, 2015.
2 Cowen, Tyler, and Alex Tabarrok. Modern principles of microeconomics. Macmillan International Higher
Education, 2015.