Demand Elasticity for Parking

The college hopes to boost parking revenue by lowering the cost of parking permit from $40 to $20. To answer each question, use the information provided below.

Data

The number requested was 400 parking permits at the current price of $40 each quarter.

The number demanded was 600 at a new price of $20 per quarter for a parking permit.

Questions

Questions 1. Describe the demand curve graph for parking permits at the college in terms of downward or upward sloping and steepness. 2. What was the price elasticity of demand for parking permits between the prices of $20 and $40? (use the midpoint formula for price elasticity of demand) Show your work. 3. Is the price elasticity of demand you just calculated greater than one, less than one, or equal to one? 4. Is the demand for parking permits elastic or inelastic? 5. What was the total revenue from parking permits at a new price of $20? 6. What was the total revenue from parking permits at a current price of $40? 7. At what price, $20 or $40, was total revenue higher? 8. How is total revenue related to price elasticity of demand? Explain. 9. Did the College meet its goal and why