Suppose the athletic department wanted to increase revenues by decreasing ticket prices to football games. This would make sense only if the price elasticity of demand for football games was (in absolute value)
A) greater than 1.
B) equal to 1.
C) less than 1.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

If the price elasticity of demand for football games is greater than 1, it means that a decrease in ticket prices will result in a greater increase in quantity demanded, leading to an overall increase in revenue. In other words, the increase in demand will more than offset the decrease in price. However, if the elasticity is less than 1 or perfectly inelastic, decreasing prices will decrease revenues as the increase in quantity demanded will not be enough to offset the decrease in price. Therefore, A) is the best choice.

Suppose the Athletic Department Wanted to Increase Revenues by Decreasing