Asked by Brett LeVine on Jul 12, 2024
Verified
The price elasticity of demand for a popular sporting event is 1.2. If the price of a ticket to this event increases by 10 percent, the quantity of tickets demanded will
A) decrease by 8.3 percent.
B) decrease by 12 percent.
C) increase by 12 percent.
D) increase by 8.3 percent.
Price Elasticity Of Demand
An indicator of the sensitivity of demand for a product to fluctuations in its price.
Quantity Of Tickets
The number of tickets available or sold for an event.
- Gain an understanding of what price elasticity of demand signifies and the process for calculating it.
- Analyze how elasticity affects total revenue.
Verified Answer
SC
Suléze CronjéJul 15, 2024
Final Answer :
B
Explanation :
The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. Given an elasticity of 1.2 and a price increase of 10 percent, the quantity demanded will decrease by 12 percent (1.2 * 10%).
Learning Objectives
- Gain an understanding of what price elasticity of demand signifies and the process for calculating it.
- Analyze how elasticity affects total revenue.