A minor league baseball team is trying to predict ticket sales for the upcoming season and is considering changing ticket prices.

a. The income elasticity of demand for ticket sales is estimated to be 0.7.

i. Interpret this number (explain what this number means to someone who has never heard of the word elasticity).

ii. If average income for those living in the area increases from $60,000 to $61,500, what is the predicted change in ticket sales?

b. Currently, a typical fan pays an average ticket of $10. The price elasticity of demand for tickets is estimated to be -0.6. Management is thinking of raising the average ticket price to $11. Compute the predicted percentage change in tickets sold. Would you expect ticket revenue to rise or fall?

c. The typical fan also consumes $8 worth of refreshments at the game. Thus, at the original $10 average price, each admission generates $18 in total revenue (total here means revenue from tickets sales and refreshments, not just revenue from ticket sales). Would raising the ticket prices to $11 increase or decrease total revenue? (Hint: If you wish, you may assume a certain number of tickets sold per game, say 4000. However, the question can be answered without doing that.)