a. What is your current total revenue for both groups? b. The elasticity of dema
ID: 1177523 • Letter: A
Question
a.
What is your current total revenue for both groups?
b.
The elasticity of demand is more elastic in which market?
c.
Which market has the more inelastic demand?
d.
What is the elasticity of demand between the prices of $5 and $2 in the adult market? Is this elastic or inelastic?
e.
What is the elasticity of demand between $5 and $2 in the children's market? Is this elastic or inelastic?
f.
Given the graphs and what your friend knows about economics, he recommends you increase the price of adult tickets to $8 each and lower the price of a child's ticket to $3. How much could you increase total revenue if you take his advice?
a.
What is your current total revenue for both groups?
b.
The elasticity of demand is more elastic in which market?
c.
Which market has the more inelastic demand?
d.
What is the elasticity of demand between the prices of $5 and $2 in the adult market? Is this elastic or inelastic?
e.
What is the elasticity of demand between $5 and $2 in the children's market? Is this elastic or inelastic?
f.
Given the graphs and what your friend knows about economics, he recommends you increase the price of adult tickets to $8 each and lower the price of a child's ticket to $3. How much could you increase total revenue if you take his advice?
Explanation / Answer
A. What is your current total revenue for both groups?
ANSWER: Total revenue from children%u2019s tickets is $100 and from adult tickets is $250.
Total revenue from all sales would be $350.
B.The elasticity of demand is more elastic in which market?
ANSWER: The child ticket market has the more inelastic demand.
C. Which market has the more inelastic demand?
ANSWER: The adult ticket market has the more inelastic demand.
D. What is the elasticity of demand between the prices of $5 and $2 in the adult market? Is this
elastic or inelastic?
ANSWER: The elasticity of demand between $5 and $2 is 0.21 or inelastic.
E. What is the elasticity of demand between $5 and $3 in the children%u2019s market? Is this elastic or
inelastic?
ANSWER: The elasticity of demand between $5 and $3 is 1.33 or elastic.
F. Given the graphs and what your friend knows about economics, he recommends you increase
the price of adult tickets to $8 each and lower the price of a child%u2019s ticket to $3. How much could
you increase total revenue if you take his advice?
ANSWER: If price is increased to $8 for adult tickets (maximum for the graph) and price
decreased to $3 for child tickets (minimum for graph), total revenue would increase to
$440 ($8 * 40 + $3 * 40) or $90 more than before.
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