The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:
A) increasing the price of game tickets because demand is inelastic.
B) not changing the price of game tickets because demand is unit elastic.
C) increasing the price of game tickets because demand is elastic.
D) decreasing the price of game tickets because demand is elastic.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is less than 1 (0.89), it indicates that demand is inelastic. This means that the percentage change in quantity demanded is less than the percentage change in price. Therefore, increasing the price of game tickets would lead to a smaller percentage decrease in quantity demanded, which should increase total revenue.

The Price Elasticity of Demand for Tickets to Local Baseball