The town of Harmonia gives away all 500 tickets to its annual Founder's Day Free Concert-in-the-Park to local residents. Each year, more than 500 people wish to attend the concert, so some of the residents who receive the free tickets sell them for as much as $75 each. Is a transaction where someone pays a resident $75 for a "free ticket" economically efficient?

Question

Quizplus · Accepted Answer

The transaction was voluntary and both parties benefited. The seller received money for an item they did not need or want, and the buyer was able to secure a ticket to the event. Although the buyer may have paid a higher price than the actual value of the ticket, the transaction was still efficient since it allowed for the allocation of resources to their highest value uses. Additionally, attempting to prevent people from selling items they received for free would be difficult to enforce and could inhibit economic activity.

The Town of Harmonia Gives Away All 500 Tickets to Its