Answer to Question #200094 in Macroeconomics for tanya

Question

Prices would be reduced by an average of 15 percent on 300 items, including alcohol. Some items (popcorn, bottled water, and soda) would be reduced in price by as much as 25 percent. Season-ticket holders would retain their additional 25 percent discount on top of those reductions. event venues are well-known for high priced food and drinks, the Tampa Bay Lightning are not unique in this change to low-priced concessions. The Atlanta Falcons lowered their concession prices by 50 percent, and improved food quality, in 2016. , the owners reported a 16 percent increase in concession sales revenue and an 88 percent increase in merchandise sales. The move was so successful they reduced prices again in 2019. While other franchises are slow to follow suit, if the success of these moves is sustained, it may not be long until there is a new paradigm in stadium pricing.:Q 1. Given that revenues increased when concession prices fell, what can you say about the price elasticity of demand for stadium food?

Answer 1

A rise in revenues as a result of lower concession pricing suggests that demand for stadium food has a negative price elasticity. As prices dropped, more people began to eat stadium food, resulting in increased revenue.