Home › AP Microeconomics › Economics › Elasticity › A band selling concert tickets finds demand for …
A band selling concert tickets finds demand for tickets is inelastic at its current price. According to the source, what should the band do to raise its total revenue?
ARaise the ticket price further
BCut the ticket price instead
CGive away all the tickets free
DKeep the price the same
Answer & Solution
Correct answer: A. Raise the ticket price further
1. When demand is inelastic, quantity responds less than proportionally to a price change.
2. The source recommends raising the price in this case, since the percentage decrease in quantity sold is smaller than the percentage price increase.
3. That combination means total revenue, price times quantity, rises.
4. Cutting the price when demand is inelastic would instead shrink revenue, the opposite of what the band wants.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 5 "Elasticity", section 5.3 | Elasticity and Pricing_
Related questions
Netflix officials expected to lose about 600,000 subscribers after the 2011 price increaseNetflix officials expected to lose about 600,000 of their roughly 24.6 million US subscribIn 2011, Netflix raised the price for customers who wanted to keep both streaming video anAccording to the source, at least in the short run, how does the elasticity of savings witAccording to the source, how does the wage elasticity of labor supply typically compare beCoffee and sugar are complement goods, according to the source's example. What sign does tCoffee and tea are substitute goods, according to the source's example. What sign does theHow is the cross-price elasticity of demand defined?