Asked by Domenica Andrade on May 16, 2024
Verified
If a university decreases the price of tickets to football games to collect more revenue,it is assuming that the demand for tickets is:
A) unstable.
B) price-inelastic.
C) price-elastic.
D) price unit-elastic.
Price Inelastic
Describing a situation where the demand for a good or service is relatively unaffected by changes in its price.
Ticket Sales
The process through which individuals can purchase access to events such as concerts, movies, sports events, or performances.
- Review the effect that price changes have on total revenue, bearing in mind the elasticity of demand.
- Identify situations where demand is likely to be elastic or inelastic based on the nature of the product or service.
Verified Answer
JH
Jawaher HussinMay 16, 2024
Final Answer :
C
Explanation :
If the university believes that by lowering the price of tickets they will collect more revenue, then they are assuming that the demand for tickets is price-elastic. This means that as the price decreases, the quantity demanded will increase enough to offset the lower price, resulting in more revenue. If the demand for tickets were price-inelastic, decreasing the price would not result in a significant increase in quantity demanded and may actually result in decreased revenue. If the demand were unstable or price unit-elastic, it would not necessarily support the decision to lower ticket prices.
Learning Objectives
- Review the effect that price changes have on total revenue, bearing in mind the elasticity of demand.
- Identify situations where demand is likely to be elastic or inelastic based on the nature of the product or service.
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