You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. What should you do to increase revenue if the price elasticity of demand is 1.5?

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03-02-2020
Business

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You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. What should you do to increase revenue if the price elasticity of demand is 1.5?

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BenitoMarin BenitoMarin · Answer 1 · 2020-02-03T22:49:08+01:00

Answer and explanation:

Demand Elasticity is the indicator of how demand varies with increasing other variables. Demand elasticity is often referred to as demand price elasticity since the price is the most commonly used element for calculating elasticity. Demand elasticity helps a firm anticipate market changes based on price changes, competitive products market entry and other factors. When demand price elasticity exceeds 1, it is elastic

Thus, as the price elasticity of -the price tickets- demand is 1.5, it is elastic. This scenario implies that the demand for the product is sensitive to the price increase. If the museum pursues earning more revenue, the ticket price should increase.