An economist estimates the elasticity of demand for baseball tickets to be 0.23. Using this information, a club that wants to raise revenues should:
A) lower ticket prices.
B) increase ticket prices.
C) leave ticket prices unchanged, because it is maximizing revenue.
D) raise the prices of other goods sold at games.

Question

Quizplus · Accepted Answer

Since the elasticity of demand is less than 1, demand is inelastic. Increasing ticket prices will lead to a proportionally smaller decrease in quantity demanded, thus increasing total revenue.

An Economist Estimates the Elasticity of Demand for Baseball Tickets