Answer to Question #174942 in Microeconomics for Sean

Question

Suppose that you are the Manager of a soccer stadium and you are

responsible for the sale of tickets. Two matches are scheduled to be

played during the next fortnight, the first between team X and team Y.

Market research indicates that you can sell 40 000 tickets for the X-Y

clash at R10 each, or 30 000 tickets at R20 each. Which option would

you choose? What is the arc price elasticity of the demand for tickets for

this particular game?

Answer 1

(a) 30 000 tickets at R20 each

Ed =$\frac{40000 - 30000}{10-20}$ $\times$ $\frac{10+20}{40000+30000}$

${-1000}\times$$\frac{30}{70000}$ =$\frac{-3}{7}$

Therefore, the demand is inelastic.