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
Meaning of Fiscal Policy In this general theory, Keynes used fiscal policy when referring to the influence of taxation on saving and government investment spending financed thr

Q. What do you mean by Oligopoly? Type of market condition that is most appropriate in the today's economy, is oligopoly. It's characterised by mutual interdependence among a f

Q. Show the Characteristics of monopoly? Let's summarise the main characteristics of monopoly as under: Cross-elasticity of demand for a monopoly product is zero in the

on the application of any of the concepts learnt in Managerial Economics. You may try to use these concepts to everyday problems in life or in any of the current debates on in the

Q. What do you mean by Theory of Firm? Microeconomics especially the theory of firm, assumed importance and attracted considerable attention in the early 20 th century. This sh

NATIONAL INCOME AND STANDARDS OF LIVING Standard of living refers to the quantity of goods and services enjoyed by a person. These goods may be provided publicly, such as in t

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

What is the goal of a firm?

Tomato Farm is selling tomatoes in a purely competitive market. Its output is 5000 bushels, which sell for $15 a bushel. At this level of output, the marginal cost is $15 bushel an

Q. Show the method of production? A process or method of production is a combination of inputs essential for the production of output. A method of production is technically eff