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bearhunter [10]
3 years ago
5

A downhill ski area is experiencing a decline in the number of lift tickets sold, falling revenues, and inadequate profits. The

average price of a lift ticket is $20 and there are 2,500 tickets sold daily on average. The estimated price elasticity of demand is 1.5 and the lifts are currently operating at an average of 75 percent of capacity. Which of the following methods is most likely to increase the ski area's revenues and profits.
A. a 10 percent increase in the average price of a lift ticket.B. an aggressive advertising campaign.C. a 10 percent increase in the average price of a lift ticket combined with an aggressive advertising campaign.D. a 10 percent decrease in the average price of a lift ticket.
Business
1 answer:
sukhopar [10]3 years ago
5 0

Answer:

D. a 10 percent decrease in the average price of a lift ticket.

Explanation:

When Price elasticity is greater than 1, that suggests that the demand for that particular good or service is highly responsive to price or is price-sensitive . Furthermore, If price elasticity is greater than 1 then an increase in price will cause revenue to decrease.

Applying the above-stated principle to the given scenario, it has been stated that 'The estimated price elasticity of demand is 1.5.' implying that the demand for downhill ski is highly sensitive and responsive to changes in price.

Therefore, the only logical economic strategy to improve revenues will be to decrease price so that revenue can increase.

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You are investing $500 today. If it is compounded semi-annually at an annual interest rate of 13% for the next 5 years, your inv
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Explanation:

In this question, we are expected to know the amount a certain investment would have grown to after 5 years.

Mathematically, the amount is calculated by the formula below:

A = P(1 + r/n)^nt

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4 0
3 years ago
A stock is not expected to pay dividends for the next ten years. Eleven years from today, the stock is expected to pay a dividen
8_murik_8 [283]

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$53.21

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7 0
2 years ago
Institutions specialize in raising money for governments and corporations by issuing securities.
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3 0
3 years ago
Read 2 more answers
Suppose that when the price of a movie ticket is $4, 100 people attend the matinee. If the price is increased to $5, suppose tha
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Answer:

<u>3</u>

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Price elasticity of demand is calculated as;

average price = \frac{5\ +\ 4}{2} = $4.5

Average quantity = \frac{100\ +\ 50}{2} = 75

Elasticity of demand (E_{d}) is given by \frac{change\ in\ quantity}{average\ quantity}  ÷ \frac{change\ in\ price}{average\ price}

= \frac{100\ -\ 50}{75} ÷ \frac{5\ -\ 4}{4.5}

= 3

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6 0
3 years ago
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