The elasticity of demand for World Series tickets has been estimated at -.2. Is this elastic...
The elasticity of demand for World Series tickets has been estimated at -.2. Is this elastic or inelastic?
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Given the elasticity number, do you advise the MLB to increase or decrease ticket prices in order to maximize their total revenue?
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If both World Series teams were very unpopular, do you think this would affect the elasticity of demand for World Series tickets? If yes, give a new number and say why you chose it.
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Then, given the positive or negative sign of your new number, how would the MLB maximize its total revenue by changing prices for tickets?
Homework Answers
Since the elasticity is -0.2, it is less than 1 and thus inelastic
in nature.
This means a change in price will lead to less than proportionate change in quantity demanded.
Thus, in order to maximize total revenue, the firm must increase ticket prices.
Yes, unpopular teams means highly elastic demand for world series tickets.
E.g. elasticity can be -2 (elastic and absolute value greater than 1)
In such a case, total revenue can be maximized by decreasing ticket prices
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The elasticity of demand for World Series tickets has been
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