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
Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn

Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case.

Q. What is Right Angled Isoquant? This presumes zero substitutability of factors of production. There is just one method of producing any one commodity. In this case, isoquant


how to solve problems using derivatives ?

Jeremy is an economics learner who loves hamburgers. He could eat any number of them for dinner, but he gets a really bad stomach ache after eating a certain amount. In fact, his u

How does economic theory contribute to managerial decisions

Bikes-for-two, Inc., produces tandem bicycles. Its costs have been analyzed as follows: VARIABLE COST Materials $30/unit Manufacturing labor 3 hours/unit ($8/hour) Assembly labor 1

Transfer Payments Are any payments made to households by the government that are not made in return for the services of factors of production i.e. there is no Quid pro Quo.  S

Define the shift in demand curve To put it differently, demand for a commodity means entire demand schedule that demonstrates the varying amounts of goods purchased at alternat