complicated.) The band knows that it faces a downward-sloping demand curve; that is, if the band raises the

ticket price, it will sell fewer seats. How should the band set the ticket price to generate the most total revenue,

which in this example, because costs are fixed, will also mean the highest profits for the band? Should the band

sell more tickets at a lower price or fewer tickets at a higher price?

The key concept in thinking about collecting the most revenue is the price elasticity of demand. Total revenue

is price times the quantity of tickets sold. Imagine that the band starts off thinking about a certain price, which

will result in the sale of a certain quantity of tickets. The three possibilities are in Table 5.3. If demand is elastic
122 5 • Elasticity

at that price level, then the band should cut the price, because the percentage drop in price will result in an
{"title": "Principles of Microeconomics 3e", "upload_timestamp": "2026-02-07T15:37:44.339247", "total_pages": 597, "file_size_mb": 26.99, "creationdate": "2022-12-07T14:15:44-06:00", "producer": "Prince 14.2 (www.princexml.com)", "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "moddate": "2022-12-07T14:23:05-06:00", "uploaded_via": "batch_uploader", "creator": "PDFMiner", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a"}