Elasticity of demand, Managerial Economics


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: 4/8/2013 10:31:38 AM | 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
Q. Explain about Utility analysis? A subset of consumer demand theory which analysis consumer behaviour and market demand employing marginal utility and total utility. Key prin

Q. What do you mean by Market Structure? Market economy pricing is conditioned by market structure. There are various forms of market structures. Perfect competition is accorde

Explain in brief the relationship between TR,AR and MR under perfect market condition.

Disadvantages of the Planned System The centrally planned economies suffer from the following limitations: Lack of choice:   Consumers have little influence over what is p

THE KEYNESIAN THEORY OF CONSUMPTION FUNCTION The theory was developed during the Great Depression which plagued Europe and America.  During this time, there was excess capacit

Prices of the factors of production As the prices of those factors of production used intensively by X producers rise, so do the firms' costs. This cause supply to fall as some

how equilibrium output can be find in williamson model

In this question you will consider the impact on the building industry of the earthquake. Two construction and materials indices have been provided for the analysis.  If your famil

Factors influencing the supply of a commodity a)         Own Price of the commodity There is a direct relationship between quantity supplied and the price so that the hig

Can identity economics explain some patterns observed in the Australian economy