Exhibit 5-6 Demand curve for concert tickets
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In Exhibit 5-6, if promoters lower their ticket price from $30 to $20, then:
A. ticket sales will increase but total revenue will decrease because demand is inelastic between $30 and $20.
B. both ticket sales and total revenue will increase because demand is inelastic between $30 and $20.
C. ticket sales will decrease but total revenue will increase because demand is elastic between $30 and $20.
D. both ticket sales and total revenue will increase because demand is elastic between $30 and $20.
Answer: D
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Gary Franklin is a movie critic. He invented the Franklin Scale with which he rates movies from 1 to 10 (10 being best). When asked about his scale, Mr. Franklin explained "that it is a subjective measure of movie quality
A movie with a ranking of 10 is not necessarily 10 times better than a movie with a ranking of 1, but it is better. A movie with a ranking of 5 is better than a movie with a ranking of 1, but is not as good a movie with a ranking of 10. That's all it really tells you." Based on Mr. Franklin's description, his scale is: A) ordinal but not cardinal. B) cardinal but not ordinal. C) an objective standard to judge movies. D) neither cardinal nor ordinal.
In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?
A. "I pinch pennies in buying other products, but like most people I feel I owe it to myself to get the best brand of this product." B. "The brand I buy is so superior to other available brands that I hardly consider the others." C. "The different brands are almost identical so I always buy the cheapest." D. "I use so little of that product that when I do buy it, I don't pay much attention to the price."