When the price of movie tickets in a certain town was reduced, the movie theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of
A)1.0.
B)greater than 1.
C)0.5.
D)zero.

Question

Quizplus · Accepted Answer

When the price of movie tickets was reduced and the movie theaters' revenues did not change, it indicates that the percentage decrease in price was exactly offset by a percentage increase in quantity demanded, which is characteristic of a price-elasticity coefficient of 1.0 (unit elastic demand).

When the Price of Movie Tickets in a Certain Town