(Figure: Market for Movie Tickets) The figure shows the market for movie tickets. If the movie theater changes the price per ticket from $12 to $13.50, the change in total revenue is:
A)$180,000
B)$-18,000
C)$162,000
D)$18,000

Question

(Figure: Market for Movie Tickets) The figure shows the market for movie tickets. If the movie theater changes the price per ticket from $12 to $13.50, the change in total revenue is: 
A)$180,000 
B)$-18,000 
C)$162,000 
D)$18,000

Quizplus · Accepted Answer

To determine the change in total revenue, we need to multiply the new price by the new quantity sold and then subtract the original total revenue.

Original total revenue = $12 x 150,000 = $1,800,000

New quantity demanded can be estimated by using the midpoint formula: 
[(Q2 - Q1) / ((Q1 + Q2)/2)] / [(P2 - P1) / ((P1 + P2)/2)] = [(120,000 - 150,000) / ((120,000 + 150,000)/2)] / [($13.50 - $12) / (($13.50 + $12)/2)] = -30,000 / 1350 = -22.22

Since we can't sell a negative number of tickets, we round down to -22,000.

New total revenue = $13.50 x 128,000 = $1,728,000

Change in total revenue = $1,728,000 - $1,800,000 = -$72,000

Therefore, the correct choice is B: $-18,000, indicating a decrease in total revenue of -$72,000.

(Figure: Market for Movie Tickets) the Figure Shows the Market