Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.
-When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50, his total revenue falls. This means that:
A)the demand for movie tickets is highly elastic.
B)the supply of movie tickets is perfectly elastic.
C)the supply of movie tickets is unit-elastic.
D)the demand for movie tickets is inelastic.
E)the supply of movie tickets is inelastic.

Question

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. 
-When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50, his total revenue falls. This means that:
A)the demand for movie tickets is highly elastic. 
B)the supply of movie tickets is perfectly elastic. 
C)the supply of movie tickets is unit-elastic. 
D)the demand for movie tickets is inelastic. 
E)the supply of movie tickets is inelastic.

Quizplus · Accepted Answer

When the price of movie tickets increases and total revenue falls, it indicates that the quantity demanded decreases by a proportion greater than the price increase. This is characteristic of a highly elastic demand, where consumers are very responsive to price changes.

​Figure 53

Figure 53