The New York City (NYC) Parks Derailment recently changed its pricing policy wit

Question

The New York City (NYC) Parks Derailment recently changed its pricing policy with regard to the use of tennis courts in public parks. According to a story in the Wall Street Journal of 8/5/2012. "Single-pay passes for an hour of court time jumped to $15 from $7." Under the new price level, this resulted in a drop in single-play passes to 27.000 compared to 40.000 before. a. (2 pts.) What economic principle (or "law") is represented in this story? Someone in NYC says, "anybody could have told the Parks Derailment that this huge price increase is going to cause a decrease in demand for tennis courts." Do you agree? Why or why not? What tennis players in NYC. if any. will be better off economically by this policy that raises the price of playing tennis? Based on the two data points you have, is the demand for single-pay passes elastic or inelastic? Exact calculations are not necessary for a correct answer. Based on your response to pail e. of this question, will the NYC Parks Department 'lake in" more revenue or less as a result of the new price policy? Exact calculations need not be shown.

Explanation / Answer

a) this price elaticity law of demand b) price elasticity tells about how quantity demanded gets affected when there is 1 unit increase in price c) yes i agree that due to increase in price quantity demanded decreased. as demand curve is negatively sloped . so with increase in price demand decreases e) elasticity = dq/dp *p/q = 40000-27000)/ (7-15) * (7+15)/2) / (40000+27000)/2 = -0.533 as magnitude is less than 1 . so it is inelastic f) it will take less revenue as it is in elastic

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