The Mesa Redbirds football team plays in a stadium with a seating capacity of 80 000. However

QUESTION

The Mesa Redbirds football team plays in a stadium with a seating capacity of 80,000. However, during the past season, attendance averaged only 50,000. The average ticket price was $30. If price elasticity is 4, what price would the team have to charge in order to fill the stadium? If the price were to be decreased to $27 and the average attendance increased to 60,000, what is the price elasticity?
1) Percent change in demand dropped from 80,000 to 50,000 For 80,000, the drop is -30,000 % change = (-3/8)(100) =-300/8 Percent change in price should drop from 30 to 30-x to fill the stadium Elasticity = % change in demand / % change in price = (-300/8) / (30-x)*100/30 solve (-300/8) / (30-x)100/30 = -4 for x -90/8 =-4(30-x) -90 =-32(30-x)

-90 = -960+32x 32x= 870 x=27.19 Price should be set at $27.19 to fill the stadium. change demand = 10,000/60000 =1/6 change in price = 3/27 = 1/9 Price elasticity = change in demand / change in price = (1/6) /(1/9) = 9/6 = 3/2=1.5

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