Assume a move theater owner wants to raise more revenue from ticket sales. What should the theater owner due if the price elasticity of demand for his tickets is elastic?
A) the theater owner should raise ticket prices in order to collect more from each customer.
B) the theater owner should lower ticket prices in order to increase the number of customers.
C) the theater owner should keep ticket prices the same, because he won't be able to increase sales.
D) It depends on what movie is currently showing at the theater.

Question

Quizplus · Accepted Answer

If the price elasticity of demand for the theater's tickets is elastic, it means that customers are very sensitive to changes in ticket prices. This suggests that if the theater owner were to raise ticket prices, the decrease in demand from customers would be significant and would result in a decrease in total revenue. Therefore, the better option for the theater owner would be to lower ticket prices to increase the number of customers, which would lead to an increase in total revenue.

Assume a Move Theater Owner Wants to Raise More Revenue