The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. What would an economist advise in order to boost ticket revenues?
A) increasing the price of hockey match tickets, because demand is inelastic
B) decreasing the price of hockey match tickets, because demand is elastic
C) not changing the price of hockey match tickets, because demand is unit elastic
D) increasing the price of hockey match tickets, because demand is elastic

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is less than 1 (0.89), it indicates that demand is inelastic. In such cases, increasing prices can lead to higher revenue because the percentage decrease in quantity demanded is less than the percentage increase in price.

The Price Elasticity of Demand for Tickets to Local Hockey