Suppose a movie theater raises its ticket prices by 10% and the total revenue it receives in ticket sales doesn't change one bit from the previous week
What can you say about the price elasticity of demand at that new price? Could this go on indefinitely? In other words, would continued price increases leave total revenue unchanged without bound? Why or why not?
You could conclude that the movie theater tickets unitary price elastic at this point on the demand curve. This could not go on forever. As ticket prices rose further there would come a point where one would reach the elastic portion of the demand curve and this would lead to a decline in revenue.
You might also like to view...
Of all the payments made to factors of production in the United States in 2013, ____ received the lowest share
a. land rents b. labor c. interest payments d. corporate profits
Which of the following examples shows the law of demand?
a. The demand for flashlights remained constant as the price decreased. b. The demand for avocados remained constant as the price increased. c. The demand for baseballs increased as the price decreased. d. The demand for geraniums increased as the price increased.