It has been estimated that the price elasticity of demand for attending baseball games is 0.23. Other things held constant, a 10 percent increase in attendance can be explained by a:
A) 43.48 percent fall in the price of a ticket.
B) 43.48 percent rise in the price of a ticket.
C) 23 percent fall in the price of a ticket.
D) 23 percent rise in the price of a ticket.

Question

Quizplus · Accepted Answer

The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. With an elasticity of 0.23, a 10% increase in attendance implies a 43.48% decrease in price (10% / 0.23).

It Has Been Estimated That the Price Elasticity of Demand