Exhibit 5-6 Demand curve for concert tickets

In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:
A) ticket sales will increase but total revenue will decrease because demand is inelastic between $30 and $20.
B) both ticket sales and total revenue will increase because demand is inelastic between $30 and $20.
C) ticket sales will decrease but total revenue will increase because demand is elastic between $30 and $20.
D) both ticket sales and total revenue will increase because demand is elastic between $30 and $20.

Question

Exhibit 5-6 Demand curve for concert tickets
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In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:
A) ticket sales will increase but total revenue will decrease because demand is inelastic between $30 and $20. 
B) both ticket sales and total revenue will increase because demand is inelastic between $30 and $20. 
C) ticket sales will decrease but total revenue will increase because demand is elastic between $30 and $20. 
D) both ticket sales and total revenue will increase because demand is elastic between $30 and $20.

Quizplus · Accepted Answer

The demand curve shows that at a price of $30, the quantity demanded is 2,000 tickets, and at a price of $20, the quantity demanded increases to 3,000 tickets. This suggests that the demand is elastic between $30 and $20, meaning that a decrease in price will result in an increase in total revenue. Therefore, if promoters lower their ticket price from $30 to $20, both ticket sales and total revenue will increase.

Exhibit 5-6 Demand Curve for Concert Tickets