1. Equation for demand curve has been estimated to be Q = 100 - 10P + 0.5Y where Q in quantity, P is price and Y is income. Suppose that P = 7 and Y = 50.
a. Interpret the equation.
b. At price of 7, what is price elasticity?
c. At income level of 50, what is income elasticity?
d. Now suppose that income is 70. What is the price elasticity at P = 8?
2. Mesa Redbirds football team plays in stadium with a seating capacity of 80,000. Though, during the past season, attendance averaged only 50,000. Average ticket price was $30. If price elasticity is -4, what price would team have to charge to fill stadium? If price were to be decreased to $27 and average attendance increased to 60,000, what is the price elasticity?