Elasticity of demand, Business Economics

Question #1
A baseball team is trying to predict ticket sales for the upcoming season. They are also considering increasing prices. The market has a population of 2 million persons. The team sold 2 million tickets last year.
a—the elasticity of ticket sales with respect to the size of the population is estimated to about 0.8.
i—briefly explain what this number means? Hint—this means if population rises by 10%, what is the relevance of 0.7. (2 Points)

ii—Keeping mind the elasticity of tickets sales with respect to the size of the population is estimated to be 0.7, if the local population increases by 100,000, what does this mean for ticket sales? Please provide the change in the number of ticket’s demanded. (3 Points)

b—currently the ticket price is $10. The price elasticity of demand for tickets is -0.60. Compute the
predicted change in tickets sold if the price were raised to $13. Also what is the expected change in total revenue? (4 Points)

c—The typical fan also consumer $7 worth of refreshments at a game. Would raising ticket prices to
$12 increase or decrease overall total revenue (ticket revenue and refreshment revenue)? How much would it go up or down? (8 Points)
Posted Date: 4/7/2013 9:32:29 PM | Location : United States







Related Discussions:- Elasticity of demand, Assignment Help, Ask Question on Elasticity of demand, Get Answer, Expert's Help, Elasticity of demand Discussions

Write discussion on Elasticity of demand
Your posts are moderated
Related Questions
Harvard Business Review Case Study 9-572-029 Fisher Price Toys... Need help with the following questions: 1. Should Fisher Toys lauch the ATV Explorer? 2. What price tag should the

Bonjour, Veuillez SVP me donner un modèle d''un projet. Merci

How does sectoral change enhance development? The Lewis Model argues economic growth needs structural change into the economy whereby surplus labour into traditional agricultu

On the first exam your score was a 96%, on the second it was an 89%, and on the third test it was a 79%. The first exam is worth 10% of your grade, the second is worth 19% of your


Financial engineering deals with the design of new assets. Draw the payoff (at t=1) of the following bull butterfly spread: Purchase 1 call with exercise price a Sell 2 calls

You should use a variety of other methods of capital cost estimation to check and refine your estimate to give a definitive capital cost for the plant. You will need to compare the

The following represents the potential outcomes of your first salary negotiation after graduation: Assuming this is a sequential move game with the employer moving first, indicate

explain four major managerial factors that affect diseconomies of scale