Question

42) 30,000 tickets are sold for a rock concert when the price of a ticket is $25 each,. After increasing the ticket price to $30 each, 20,000 tickets are sold for the rock concert. At the original price, the demand for a concert ticket is elastic. Ounitary elastic Oinelastic. perfectly elastic

Answer 1

At original price of $25, 30,000 tickets were sold.
At price of $30, 20,000 tickets were sold

% Change in demand = (20,000 - 30,000) / 30,000
% Change in demand = -0.3333 or -33.33%

% Change in price = ($30 - $25) / $25
% Change in price = 0.20 or 20.00%

Price Elasticity = % Change in demand / % Change in price
Price Elasticity = -33.33% / 20.00%
Price Elasticity = -1.67

Price elasticity of demand is -1.67, so the demand for a concert ticket is elastic