Qqd 2000 - 25 p 2 a where p represents cost as well as a

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Q. Qd = 2000 - 25 P + 2 A,
where P represents cost as well as A is the number of weekly advertisements.
Presently the theater advertises 125 times for every week. Assuming this is the only theater in town, as well as its marginal cost, MC, is equal to zero,

a. Determine the profit maximizing ticket cost for the theater.

b. What is the cost elasticity of its demand as well as at this cost?

c. What is the elasticity of its demand as well as with respect to advertising?

d. Now Assume the theater increases the number of its ads to 250. Should the theater increase its cost following this ad campaign? Clarify

Reference no: EM13353516

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