The price elasticity of demand for tickets to North Carolina State University football games is –3.00. At the prevailing price of $10 per ticket, the quantity of tickets demanded exceeds the stadium's seating capacity. The quantity of tickets demanded must fall by 30% to equal the total number of seats available. To eliminate the shortage of seats, the price of tickets should
The formula for price elasticicty of demand is Ped = change in quantity demanded/change in price correct So the knowns are ped which is -3.00, the price which is $10, and the change in quanitity which is 30? It seems ike we are already given the price, so im not sire how to caclulate what price the ticket should be, or should we use two formulas If anyone can give me some pointers, and a short tutorial for price elasticity then that would be sweet. Thanks.
You have that the price elasticity of demand is equal to percentage change in quantity demanded divided by percentage change in price. For quantity demaned to fall by 30% while the elasticity of demand is -3 means that percentage change in price must equal -30/-3 = 10.
So, the ticket price must rise by 10% percent to eliminate the shortage. Thus, the new price should be $10*1,1 = $11.