Florida State University has just lowered the price of its season football tickets from $350.00 to $300.00. As a result, there was an increase in the number of season tickets purchased from 43,000 to 47,000. The price elasticity of demand for season tickets equals
A) 1.71.
B) 1.58.
C) 0.71.
D) 0.58.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). The percentage change in quantity demanded is ((47,000 - 43,000) / 43,000) * 100 = 9.3%. The percentage change in price is ((300 - 350) / 350) * 100 = -14.3%. Therefore, the price elasticity of demand is 9.3% / -14.3% = 0.65, which is closest to 0.58.

Florida State University Has Just Lowered the Price of Its