Disney just raised its 3 day 3 park pass from $110.00 to $121.00. Sales fell from 4,000 per week to 3,000 per week. Calculate the price elasticity of demand using the arc elasticity of demand formula. % change in quantity = 3,000 – 4,000 (3,000 + 4,000)/2 × 100 = 1,000 3,500 × 100 = 28.6% % change in price = 121-110 (121 + 110)/2 × 100 = 11 115 × 100 = 9.5% % Price Elasticity of Demand = 28.6% 9.5% = 3.01 What should they do next?
Disney just raised its 3 day 3 park pass from $110.00 to $121.00.
Sales fell from 4,000 per week to 3,000 per week.
- Calculate the
price elasticity of demand using the arc elasticity of demand formula.
% change in quantity = 3,000 – 4,000
(3,000 + 4,000)/2 × 100
= 1,000
3,500 × 100
= 28.6%
% change in price = 121-110
(121 + 110)/2 × 100
= 11
115 × 100
= 9.5%
% Price Elasticity of Demand = 28.6%
9.5%
= 3.01
- What should they do next?
(Hint – look at revenues)
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