A multi-plex theatre area is experiencing a decline in the number of tickets sold, falling revenues, and inadequate profits. The average price of a ticket is $20 and there are 1000 tickets sold daily on average. The estimated price elasticity of demand is 1.5 and the theatre currently operating at an average of 75 percent of capacity. There are three proposals in front of the management to consider:Proposal A: a 10 percent increase in the average price of a ticket.Proposal B: an aggressive advertising campaign (which is expected to reduce the elasticity of demand to 1), and a 10 percent increase in the average price of a ticket. Proposal C: a 10 percent decrease in the average price of a ticket. Which proposal do you support and why?
A multi-plex theatre area is experiencing a decline in the number of tickets sold, falling revenues, and inadequate profits. The average
Proposal A: a 10 percent increase in the average price of a ticket.
Proposal B: an aggressive advertising campaign (which is expected to reduce the elasticity of demand to 1), and a 10 percent increase in the average price of a ticket. Proposal C: a 10 percent decrease in the average price of a ticket. Which proposal do you support and why?
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