Hollywood Amusement, a small independent movie theater, decreased the price of admission from $10 to $9. Prior to the price decrease, the business sold 1,000 tickets each month. After the price decrease, it experienced ticket sales of 1,500 a month. If the change in sales is attributable only to the change in price, Hollywood Amusement faces _____ for its movie tickets.

Question

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When the price decreased, the quantity demanded increased by 50% (from 1,000 to 1,500). This indicates that the demand for Hollywood Amusement's movie tickets is elastic, meaning that there is a relatively strong response to changes in price. If the demand were inelastic, the change in price would have little to no effect on the quantity demanded.

Hollywood Amusement, a Small Independent Movie Theater, Decreased the Price