question archive Tom Cruise is a seventeen-year-old high school student who works as an assistant manager at the local movie theater
Tom Cruise is a seventeen-year-old high school student who works as an assistant manager at the local movie theater
Subject:EconomicsPrice:2.88 Bought3
Tom Cruise is a seventeen-year-old high school student who works as an assistant manager at the local movie theater. If an increase in the price of movie tickets results in an increase in total revenue at the theater, this is evidence that the demand for movie tickets is:
a. price elastic,
b. price inelastic,
c. unitary elastic,
d. perfectly inelastic,
e. perfectly elastic.
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Answer: B
Since revenue went up and revenue is equal to price multiplied by quantity, the percent change in quantity had to be less than the percent change in price. This by definition means that the demand is price inelastic because elasticity of demand is equal to percent change in quantity over percent change in price.
