Question

The Country Music Hall of Fame is considering increasing admission prices to increase gross revenue. If the price of admission rises from $20 to $30, and attendance drops from 3,000 to 1,500, what is the approximate elasticity of demand for admission tickets

Answer 1

Answer:

1

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Elasticity of demand = percentage change in quantity demanded / percentage change in price

Percentage change in quantity demanded = (30/20) - 1 = 0.5 = 50%

Percentage change in price = (1500 / 3000) - 1 = 0.5 = 50%

50% / 50% = 1

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