Question

The price of stadium seats at a baseball game increases from $20 to $30 and ticket sales fall from 45,000 per game to 35,000 per game. If other things remained constant, then it appears that the price elasticity of demand is:

Answer 1

Answer:

Inelastic

Explanation:

Price Elasticity of demand is the a measure which is used to show the responsiveness of the quantity to its price.

Price Elasticity of demand = Change in quantity / Change in price

% Change in quantity = ( 45,000 - 35,000 ) / 45,000 = 22.22%

% Change in price = ( 20 - 30 ) / 20 = -50%

Price Elasticity of demand = Change in quantity / Change in price

Price Elasticity of demand = 22.22% / -50% = -0.4444

As the answer is less than 1 so, demand is Inelastic.