A minor league baseball team raised the average price of its tickets from​ $8 to ​$ and found that average attendance at its games dropped from​ 5,200 to . Using the arc elasticity of demand​ formula, the price elasticity of demand for tickets is nothing. ​(Express your answer as a real number rounded to two decimal places. ​ Don't forget the negative​ sign.) The demand for tickets is therefore ▼ price elastic price inelastic unit elastic completely elastic completely inelastic .

-0.95

inelastic

Explanation:

minor league baseball team raised the average price of its tickets from $8 to $8.90 and found that average attendance at its games dropped from 5, 200 to 4, 700. Using the arc elasticity of demand formula, the price elasticity of demand for tickets is .(Express your answer as a real number rounded to two decimal places. Don't forget the negative sign.) The demand for tickets is therefore

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price  

Midpoint change in quantity demanded = change in quantity demanded / average of both demands

change in quantity demanded = 4700- 5200= -500

average of both demands = (4700 + 5200 ) / 2 = 4950

Midpoint change in quantity demanded = 500 / 4950 = -0.101

midpoint change in price = change in price / average of both price

change in price = 8.9 - 8 = 0.9

average of both price = (8.9 + 8) / 2= 8.45

0.9 / 8.45 = 0.107

-0.101 / 0.107 = -0.95

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.  

Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one

Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.  

Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases  

Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.

0.1125

-0.1754

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