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According to Exhibitor Relations Co., in 2006 average movie ticket prices were $6.55 and attendance was 1.4 billion; in 2007 ticket prices were $6.88 and attendance was 1.41 billion.
a. What happened to total revenue from 2006 to 2007?b. If you were to estimate elasticity from these figures, what would your estimate be?
c. What provisions would you offer about your estimate of elasticity?
It assumes that new movies were likely released between 2006 and 2007, which may not be the case. It assumes other things, such as the price of movie tickets, have remained constant from 2006 to 2007. The price of movie tickets likely rose. It assumes that attendance rose, which may not be the case. It assumes other things, such as income, have remained constant from 2006 to 2007. Income has likely changed.
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