Question
A local ski area is considering raising the price of an annual pass from $800 to $900. The number of annual passes sold currently at
A local ski area is considering raising the price of an annual pass from $800 to $900. The number of annual passes sold currently at a price of $800 is 1,000. The best available information suggests that the price elasticity of demand for annual passes is -1.6. Answer the following questions.
a. What is the predicted membership level after the price is raised?
b. Compare total revenue for the ski area at the annual pass fee of $800 and at the price of $900. Which is higher?
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Principles of Economics
Authors: N. Gregory Mankiw
8th edition
1305585127, 978-1305971493, 978-1337516860, 1337516864, 978-0357539200, 978-1305585126
