student gives swimming lessons at the local club. One summer the club charged $40 and enrolled 1,000 kids. The next summer the managers decided to raise the fee to $50, and only 400 swimmers enrolled. The managers of the club should have thought about the price elasticity of demand for lessons. If the managers had realized how high the elasticity of demand for their product is, they might have avoided a half-empty pool.
student gives swimming lessons at the local club. One summer the club charged $40 and enrolled 1,000 kids. The next summer the managers decided to raise the fee to $50, and only 400 swimmers enrolled. The managers of the club should have thought about the price elasticity of demand for lessons. If the managers had realized how high the elasticity of demand for their product is, they might have avoided a half-empty pool.
Chapter6: Elasticities
Section: Chapter Questions
Problem 3P
Related questions
Question
A student gives swimming lessons at the local club. One summer the club charged $40 and enrolled 1,000 kids. The next summer the managers decided to raise the fee to $50, and only 400 swimmers enrolled. The managers of the club should have thought about the price
A. Calculate the price elasticity of demand.
B. It seems that elasticity of demand is very high. Give some reasons why it might have been this big.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning