You are the manager of a theater. At present the theater charges the same admission price of $8 to all customers, regardless of age. You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults. You tell your supervisor
that your proposal is likely to increase revenue. What must be true about the price elasticity of demand if your proposal is to achieve its goal of raising revenue? Explain your answer.
What will be an ideal response?
You believe that the price elasticity of demand for theater tickets for children is elastic. Hence, a decrease in price will increase revenue. The demand for tickets for adults is inelastic; therefore, increasing price for this group will increase revenue.
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According to Say's law,
A) desired expenditures cannot be compared with actual expenditures. B) desired expenditures are always less than actual expenditures. C) desired expenditures are always equal to actual expenditures. D) desired expenditures are always more than actual expenditures.
A baker can produce two products: cupcakes and pies. The table below is the baker's production possibilities schedule:Production Possibilities ScheduleProductABCDEFCupcakes01220365681Pies1086420If the baker uses all of its resources to produce only cupcakes, then its production combination will be
A. F. B. A. C. B. D. E.