A Broadway play company can only charge one price for tickets to a given performance of its play. The company manager notices that the company earns greater total revenue when they charge a higher ticket price and its theater is three-quarters full than when they charge a lower ticket price and the theater is completely full. It follows that demand for this play is
A)elastic.
B)unit elastic.
C)perfectly inelastic.
D)perfectly elastic.
E)inelastic.

Question

Quizplus · Accepted Answer

Demand is considered inelastic when an increase in price does not lead to a proportionate decrease in quantity demanded. In this scenario, even with higher prices leading to a less than full theater, total revenue increases, indicating that the decrease in quantity demanded (fewer tickets sold) is not proportionate to the increase in price, which is characteristic of inelastic demand.

A Broadway Play Company Can Only Charge One Price for Tickets