The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:
A)decreasing the price of hockey match tickets because demand is elastic.
B)increasing 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 inelastic.

Question

The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:
A)​decreasing the price of hockey match tickets because demand is elastic.
B)​increasing 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 inelastic.

Quizplus · Accepted Answer

The price elasticity of demand is less than 1 (0.89), indicating that demand is inelastic. This means that the percentage change in quantity demanded is less than the percentage change in price. Therefore, increasing the price of tickets should lead to an increase in total revenue, as the decrease in quantity demanded will be proportionally smaller than the increase in price.

The Price Elasticity of Demand for Tickets to Local Hockey