Question: A baseball team is trying to predict ticket sales for the upcoming season. They are also considering increasing prices.
- The elasticity of ticket sales with respect to the size of the population is estimated to about 0.7.
- Briefly explain what this number means?
- If the local population increases from 60,000 to 61,500 what does this mean for ticket sales?
- Currently the ticket price is $10. The price elasticity of demand for tickets is -0.60. Compute the predicted change in tickets sold if the price were raised to $11. Also what is the expected change in total revenue?
- The typical fan also consumer $8 worth of refreshments at a game. Would raising ticket prices to $11 increase or decrease overall total revenue (ticket revenue and refreshment revenue)? How much would it go up or down?