4 pts. total) Suppose the New York Jets raise ticket prices from $30 to $40 per seat and experience a decline in tickets sold from 50,000 to 45,000 per game. a. (3 pts.) What is the elasticity of demand for tickets? Use the midpoint method.

Price elasticity of demand = 0.36

Explanation:

As we know that price elasticity of demand is the change in quantity demanded with respect to change in price.

Formula: (using midpoint method)

             = Q2- Q1 /  [(Q2 + Q1 )/2] / ( P2-P1 )/[ (P2+P1) / 2 ]

Where:

P1 = $30

P2 = $40

Q1=45000

Q2 = 50000

  Putting value in formula

                   =  (50000-45000) / [(50000+45000)/2 ] / (40-30)/ [(40+30)/2 ]

                  = (5000 / 47500) / (10 / 35)

                   = 0.1052 / .2857

                 =  0.36.

 =  40-30=10/40 = 25% increases in price result, (45000-50000= 5000/50000) = 10% decreases in tickets sold.