During its run on Broadway, the play The Producers regularly sold out all available tickets at the St.James Theater.The theater could have raised ticket prices from $75 to $125 and still sold all available tickets but chose not to do so.The best explanation for this decision is
A)theater owners are unaware of the elasticity of demand for Broadway shows.
B)theater owners do not want to raise their prices on weekends, when demand is high, and then have to lower prices during the week, when demand is lower.
C)firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run.
D)theater owners are not motivated to maximize their profits.

Question

Quizplus · Accepted Answer

Firms sometimes choose to give up short-run profits in order to build customer loyalty and increase their long-run profits. By keeping ticket prices steady, the theater owners may have been hoping to build a loyal customer base that would continue to support their shows in the future. Additionally, increasing ticket prices too rapidly could lead to a backlash from customers and negative publicity, which could ultimately hurt the theater's bottom line.

During Its Run on Broadway, the Play the Producers Regularly