Each summer, the city of Bethlehem, Pennsylvania, holds Musikfest, an outdoor music festival. The city has been charging $7 per day to park in city parking lots. One year it raised the fee to $10 per day. According to an article in a local newspaper, "Fewer parkers used city lots, but this year's parking rate increase (7 to 10) gave the parking authority record parking lot revenues for the annual festival." Use the info in the following table to calculate the price elasticity of demand for parking spaces in Bethlehem city parking lots during Musikfest; use the midpoint price elasticity of demand formula. Assume that nothing happened to shift demand curve for parking places. Be sure to state whether demand is elastic or inelastic.
YEAR Rate Revenue
1999 $10 $83,760
1998 7 77,791