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17 November, 17:33

It has been estimated that the price elasticity of demand for attending baseball games is 0.23. Other things held constant, a 10 percent increase in attendance can be explained by a:

(A) 43.48 percent rise in the price of a ticket.

(B) 23 percent fall in the price of a ticket.

(C) 23 percent rise in the price of a ticket.

(D) 43.48 percent fall in the price of a ticket.

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  1. 17 November, 18:02
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    (D) 43.48 percent fall in the price of a ticket.

    Explanation:

    Price Elasticity of demand measure the responsiveness of demand to change in the price of a product. It calculates the ratio of change in demand and change in price.

    Price elasticity of demand = % change in demand / % change in price

    0.23 = 10% / % change in price

    % change in price = 0.1 / 0.23

    % change in price = 0.4348 = 43.48%

    Fall in price will increase the attendance in the game.
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