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9 October, 11:01

You are in charge of the local city-owned golf course. You need to increase the revenue generated by the golf course in order to meet expenses. The mayor advises you to increase the price of a round of golf. The city golf course manager recommends reducing the price of a round of golf. What is the reason for their disagreement?

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  1. 9 October, 11:19
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    Answer: Different understanding of the nature of commodity

    Explanation: The disagreement in the given case occurs due to the fact that the mayor thinks that the demand for the services of golf course is inelastic and the manager thinks that it is elastic.

    Elasticity refers to the change in the demand for a commodity due to its change in price. Therefore, the manager is advising to decrease the price so that the demand for the golf course will increase leading to increase in revenue.

    Although the mayor thinks that the number of customers will remain same at a higher price.
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