Question

Elasticity

Watch the episode of The Simpsons "Bart Gets an Elephant". In the episode, the Simpsons find that their pet elephant, Stampy, is eating them out of house and home. So, Bart devises a plan to charge admission for people to see the elephant.

What happened at $1 price? Why did he raise the price to $100? What happened at $100 price? Did he accomplish his goal? Use your knowledge of elasticity to explain what, why, and how this plan happened.

Here is a link to the episode: http://pixa.club/en/the-simpsons/season-5/epizod-17-bart-gets-an-elephant

Answer 1

ANSWER: ELASTICITY OF DEMAND MEANS THAT HOW RESPONSIVE OF A GOOD TO CHANGE IN PRICE AS THERE IS A TRADE OFF DICTACTED BY THE LAW OF DEMAND. HIGHER PRICE WILL REDUCE THE QUANTITY DEMANDED AND VICE VERSA.

THEREFORE, IT IS NECESSARY TO MAXIMIZE TOTAL REVENUE BY BALANCING THE INCREASE IN PRICES TO THE QUANTITY DEMANDED.

1) SO AT $1 PRICE, PEOPLE ARE WILLING TO PAY $1 TO SEE STAMPY BECAUSE IT IS CHEAPER THEN GOING TO ZOO TO SEE AN ELEPHANT AND THEREFORE THE DEMAND IS HIGHLY INELASTIC AS AT $1 PRICE , PEOPLE GET THEIR MONEY WORTH.

2) BART RAISED THE PRICE TP $100 BECAUSE HE WAS ABLE TO COLLECT $58 WHICH IS GOOD BUT NOT ENOUGH TO COVER THE FOOD EXPENSES WHICH IS $300.

3) AT $100 PRICE , PEOPLE DON'T COME TO SEE ELEPHANT BECAUSE THE PRICE IS VERY HIGH AND PEOPLE AT THAT PRICE , CAN FIND OTHER FORMS OF ENTERTAINMENT LIKE EATING OUT IN A RESTAURANT OR ATTEND A CONCERT OR WATCH ANY SPORTS IN THE STADIUM AND THEREFORE PEOPLE RESPONSE TO CHANGE IN PRICE IS HIGHLY ELASTIC AS THE NO OF PEOPLE COMING TO SEE STAMPY WENT TO ZERO AS THE VALUE THAT THE VISITORS WILL GET WILL BE ZERO.

4) HE DIDN'T ACCOMPLIS HIS GOAL AS AT $100 , THE DEMAND FOR WATCHING BECAME ZERO DUE TO DEMAND BEING HIGHLY ELASTIC AS OTHER MODES OF ENTERTAINMENT BEING AVAILABLE AND HAD BART RAISED THE PRICE TO $2 , THEN PEOPLE WOULD HAVE COME TO WATCH STAMPY, AT $5 THERE WAS A GOOD CHANCE BUT AT $100 POSSIBLY NOT BECAUSE THE DEMAND IS HIGHLY INELASTIC.