Question 1 A student club wants to raise just enough income to cover its costs. Its income comes partly from membership fees and partly from selling tickets for its nightly discos. Attendance at the discos currently leads to overcrowding of the club's room. The demand for membership is price inelastic and the demand for discos is price elastic. To reduce the crowding without changing its total income, what should the club do?
Question 1 A student club wants to raise just enough income to cover its costs. Its income comes partly from membership fees and partly from selling tickets for its nightly discos. Attendance at the discos currently leads to overcrowding of the club's room. The demand for membership is price inelastic and the demand for discos is price elastic. To reduce the crowding without changing its total income, what should the club do?
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 13CQ: Suppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a....
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Question 1
A student club wants to raise just enough income to cover its costs. Its income comes
partly from membership fees and partly from selling tickets for its nightly discos.
Attendance at the discos currently leads to overcrowding of the club's room. The demand
for membership is price inelastic and the demand for discos is price elastic. To reduce the
crowding without changing its total income, what should the club do?
a) Raise both the disco ticket price and the membership fee.
b) Lower both the disco ticket price and the membership fee.
c) Raise the disco ticket price but lower the membership fee.
d) Lower the disco ticket price but raise the membership fee.
Question 2
Suppose the price of a product increases from £12 to £20 and the quantity demanded falls
from 55 a week to 45. What is the PED?
a) 0.4
b) -0.4
c) 2.5
d)-2.5
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