Final answer:
The method of estimating price elasticity of demand examines total revenue changes in response to price modifications, with elasticity influencing whether to raise or lower ticket prices. The Midpoint Method calculates elasticity by dividing the average percent change in quantity by the average percent change in price.
Step-by-step explanation:
The method of estimating the price elasticity of demand by observing the change in total revenue that results from a change in price involves analyzing how total revenue, which is the product of price and quantity of tickets sold, responds to price changes.
If the demand is elastic, lowering the price leads to a proportionately larger increase in quantity sold, thereby increasing total revenue. Conversely, when demand is inelastic, an increase in price causes a smaller decrease in quantity sold, resulting in higher total revenue.
With unitary elasticity, changes in price do not affect total revenue as the percentage change in quantity sold offsets the price change.
To calculate the price elasticity of demand, the Midpoint Method for Elasticity can be used, involving the average percent change in both quantity and price. The formula is elasticity = (percent change in quantity demanded) / (percent change in price).