Question

1.If the price elasticity of demand for hamburgers is 1.5 and the quantity demanded of hamburgers equals 40,000, what will happened to the quantity of hamburgers demanded if the price increases by 10%? What is the change in quantity? Briefly explain your answer.

2. Sport team want to boost revenues from ticket sales next academic year and hire you to advise the team whether to raise or lower ticket prices next year. If the elasticity of demand for Tiger games is estimated to be 1.6 , what should  you advise?  What if the elasticity of demand is 0.4?

3.If a 10% decline in the price of Wi-Fi services increases the quantity of mobile computing devices demanded by 20% and increases the quantity of Wi-Fi services demanded by 15%, calculate the cross-price elasticity of demand between Wi-Fi service and mobile computing devices?  Interpret your results.

Answer 1