When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls.This means that:
A)the demand for movie tickets is highly elastic.
B)the supply of movie ticket is perfectly elastic.
C)the supply of movie tickets is elastic.
D)the demand for movie tickets is inelastic.
E)the supply of movie tickets is inelastic.

Question

Quizplus · Accepted Answer

When the price increase leads to a fall in total revenue, it indicates that the demand is elastic. This means consumers are sensitive to price changes, and the percentage drop in quantity demanded is greater than the percentage increase in price.

When the Manager of a Local Movie Theater Raises the Price