DiDIEcoWikipedd Login I Salestorce (TCO B) The supply and demand schedules for t

Question

DiDIEcoWikipedd Login I Salestorce (TCO B) The supply and demand schedules for tickets to basketball games in town of Oakwood are given in the table below (20 points) Quantity Quantity Demanded 3,000 2,500 2,000 1,500 1,000 Price Supplied 3,000 3,000 3,000 3,000 3,000 $6 10 The stadium owners need to find the optimum price for the games Part A) What are the coefficients of elasticity of supply and demand if the price is raised from $6 to S8? (8 points) (Part B) Characterize the demand and supply for tickets based on the calculated elasticities (4 points) (Part C) What is the optimum price that the stadium owners can set for the tickets? (4 points)

Explanation / Answer

Part A

dQ/Q= (8-6)/6= 1/3

dP/P = (2000-3000) /3000=-1/3

Coefficient of elasticity is 1 hence price elasticity of demand is 1

And for Price elasticity of supply it is inelastic as supply curve is vertical

PES= 0

Answer for B

We have Price elasticity of demand is -1

Hence demand equation here is P= a-Q

Q =a-P

To calculate the value of a using Q =3000 and P=6

a = P+Q = 3006

Q = 3006-P

And for supply curve this supply is invariant of price level

Q=3000

Answer for c

To find optimum level of quantity

Supply = Demand

Q's= Qd

3000= 3006-P

P =6

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