Elasticity of demand , Microeconomics

The Bushman Cinema is the only movie theatre located in the medium-size country town of Sleepy Hollow.  The owner wants to charge an admission fee of $10 per seat and past experience suggests that at this price the theatre will be two-thirds full. An economist visiting the town tells the owner that he thinks demand is linear (represented by a straight-line) and that the elasticity of demand  is -0.78. Should the owner raise the price, lower the price or leave it unchanged if she wants to maximise revenue?  Give reasons for your answer.

 

 

Posted Date: 2/26/2013 8:15:38 AM | Location : United States







Related Discussions:- Elasticity of demand , Assignment Help, Ask Question on Elasticity of demand , Get Answer, Expert's Help, Elasticity of demand Discussions

Write discussion on Elasticity of demand
Your posts are moderated
Related Questions
Q. What do you meant by Derivatives? Derivatives: A derivative is a financial asset whose resale value depends on the value of other financial assets at different points in tim

Engel Curves -Engel curves relate quantity of good consumed to income. -If good is a normal good, Engel curve is sloping upward. -If good is an inferior good, the Engel c

Evaluation of the WTO: The WTO is different from and an improvement over the GATT in the following respects:  •  The WTO is more global in its membership.  •  The WTO ha

What is the optimal consumption bundle and marginal utility per dollar? The optimal consumption bundle is the consumption bundle which maximizes a consumer's total utility sp

The price of a laptop increases by 20% and there is a 40% drop in the quantity demanded.

What are externalities? Give an example of positive and negative externality and explain why the market outcomes are inefficient in the presence of externalities?

critically analysis firm theory of profit maximization?

what is disposable income and its importance.


Q. Explain about Gross Domestic Product? Gross Domestic Product:Value of all the services and goods produced for money in an economy, evaluated at their market prices. Excludes