Question

Suppose the price elasticity of demand for airplane tickets is about -3. In order to get people to buy 30% more tickets, the price would have to ________________ .

Answer 1

To get 30% more ticket sales, the price would have to be lowered by 10%.

Step-by-step explanation:

The price would have to be lowered in order to get people to buy 30% more tickets. Since the price elasticity of demand for airplane tickets is about -3, a 1% decrease in price would lead to a 3% increase in quantity demanded. To calculate the price decrease needed to get a 30% increase in demand:

1. Convert the percentage increase in quantity demanded to a decimal: 30% = 0.3
2. Divide this decimal by the absolute value of the price elasticity of demand: 0.3 / |-3| = 0.1
3. Convert this result to a percentage: 0.1 = 10%

Therefore, the price would have to be lowered by 10% in order to get people to buy 30% more tickets.