AMC Theaters is considering raising the price of its tickets from $10 to $13. In order to make sure that this strategy is profitable, the theater is testing a pricing increase of $1.00 throughout America. For each $1.00 increase, demand drops 5%; demand is 3500 units when the tickets are priced at $10. The theater's fixed costs are $10,000 and unit variable cost is $3. Based on this information, calculate the following: a. The price elasticity of demand. Is it elastic, inelastic, or unitary elastic? b.Calculate the demand, fixed costs, variable costs, and profit for each price (i.e = $10, $11, $12, $13). What is the most profitable selling price and what profit should the theater expect at this price?
AMC Theaters is considering raising the
a. The
b.Calculate the demand, fixed costs, variable costs, and profit for each price (i.e = $10, $11, $12, $13). What is the most profitable selling price and what profit should the theater expect at this price?
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