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Suppose the elasticity of demand for your parking lot spaces, which are located in a downtown business district, is –1.8, and the price of parking is $7 per day. Additionally, suppose that your MC is zero,
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Suppose the elasticity of demand for your parking lot spaces, which are located in a downtown business district, is –1.8, and the price of parking is $7 per day. Additionally, suppose that your MC is zero, and your capacity has been 80% full at 9 AM each day over the last month. Since demand is______, and the lot is below capacity,________is the optimal pricing strategy.

User Sungkwangsong
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Answer:

ELASTIC

DECREASING PRICE

Step-by-step explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.

The demand for your parking lot spaces is elastic. if the price of parking is reduced, the demand for parking would rise

User Nassim Ben
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