Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for $35 instead of the usual $40. If both ticket revenues and blood donations rise with this plan, which of the following is true?
A) The demand for Houston Rockets' tickets is price elastic.
B) The demand for Houston Rockets' tickets is price inelastic.
C) The demand for blood donations is price elastic.
D) The demand for blood donations is price inelastic.

Question

Quizplus · Accepted Answer

When the price of tickets is reduced and both ticket revenues and blood donations increase, it indicates that the demand for tickets is price elastic. This is because the percentage increase in quantity demanded (and thus revenue) is greater than the percentage decrease in price.

Suppose That the Houston Rockets' Management Is Considering a Plan