he director of a theater company in a small college town is considering changing the way he prices tickets. He has hired an economic consulting firm to estimate the demand or tickets. The firm has classified people who go to the theater into two groups and has ome up with two demand functions. The demand curves for the general public (Qgp) nd students (Qs) are given below: Qgp = 500 – 5P Qs = 200 - 4P a. Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $35, identify the quantity demanded by each group. b. Find the price elasticity of demand for each group at the current price and quantity. c. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket? Explain. d. What price should he charge each group if he wants to maximize revenue collected from ticket sales?

he director of a theater company in a small college town is considering changing the way he prices tickets. He has hired an economic consulting firm to estimate the demand or tickets. The firm has classified people who go to the theater into two groups and has ome up with two demand functions. The demand curves for the general public (Qgp) nd students (Qs) are given below: Qgp = 500 – 5P Qs = 200 - 4P a. Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $35, identify the quantity demanded by each group. b. Find the price elasticity of demand for each group at the current price and quantity. c. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket? Explain. d. What price should he charge each group if he wants to maximize revenue collected from ticket sales?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Help with this graph
Could you please help me understand why the correct answer is what it is for each of these true/fase statments? I have tried this problem a couple times and I keep getting it incorrect. If you could show you you used your calculation solution to determine elasticity, that would be very helpful. Thanks!
tion 14 Suppose you own two Domino's Pizza franchises in your town. After reading the latest issue of Pizza Monthly, you have concluded that both of your locations are generating below average revenue. You hire a ocal economics professor to conduct a pricing experiment. Here is her report: ocation 1: A 10% increase in price resulted in a 5% drop in the quantity demanded. ocation 2: A 10% increase in the price resulted in a 20% drop in the quantity demanded. sing this information, how should you alter your pricing policy to increase your revenue at each location? ( the toolbar, press ALT+F10 (PC) or ALT-FN-F10 (Mac
Suppose a local supermarket runs a discount campaign on the sales of shampoos using discount coupons – any customer who shows a discount coupon will be offered an X% discount on the original retail price on Black Friday. Briefly explain the economics behind this discount campaign.
1. As a transit planner for the city of Miami, you must predict how many people ride the Miami Metrorail and how much money is generated from train fares. According to a recent study, the short-run elasticity of demand for Metrorail is 0.62 and the long- run elasticity is 1.59. The current ridership is 50,000 people per day. Suppose the city commission decides to increase fares by 10%. Predict the changes in train ridership over a one-month period and a five-year period. ANS: b. Over the one-month period, will total revenue increase or decrease? What will happen in the five-year period? ANS
Jim's Camera shop sells two high-end cameras, the Sky Eagle and Horizon. The demand for these two cameras are as follows (DS = demand for the Sky Eagle, Ps is the selling price of the Sky Eagle, DH is the demand for the Horizon and PH is the selling price of the Horizon): Ds = 230 - 0.5 Ps + 0.38 PH DH = 260 + 0.1 Ps - 0.62 PH The store wishes to determine the selling price that maximizes revenue for these two products. Select the revenue function for these two models. Choose the correct answer below. (i) Ps Ds + PHDH = PH(260 - 0.1 Ps - 0.62 PH) + Ps(230 - 0.5 Ps + 0.38 PH) (ii) Ps Ds - PH DH = Ps(230 - 0.5 Ps + 0.38 PH) - PH(260 - 0.1 Ps - 0.62 PH) (iii) Ps Ds + PH DH = Ps(230 - 0.5 Ps + 0.38 PH) + PH(260 + 0.1 Ps - 0.62 PH) (iv) Ps Ds - PH DH = Ps(230 + 0.5 Ps + 0.38 PH) - PH(260 - 0.1 Ps - 0.62 PH) Answer: Option 3 Find the prices that maximize revenue. Do not round intermediate calculations. If required, round your answers to two decimal places. Optimal Solution:…
please solve C by midpoint method Suppose that the demand schedule for rice for a Saudi family is as follows:PriceQuantity DemandedOf Rice Per Month(income = SR 10,000)Quantity DemandedOf Rice Per Month(income = SR 15,000)SR 5 60 70SR 4 80 95SR 3 100 120SR 2 120 145SR 1 140 170a. Given the table above, draw the demand curve of rice using Excel.b. Show what will happen to your graph if this family like now less rice as they are eatingmore outside.c. Use the midpoint method to calculate the price elasticity of demand as the price of riceincreases from SR 4 to SR 5 if (i) family’s income is SR 10,000 and (ii) family’s income is SR15,000.
The State government is considering building a new highway. Linda lives near the proposed highway. Her demand for trips per month is given by Q = 60 - 0.5P, where Q is the number of trips and P is the average cost per trip in cents. The current average cost per trip is 60 cents, and the new highway is expected to reduce it to 40 cents. A legislator asks Linda how much she is willing to pay per month for the construction of the new highway. Linda: I am making 30 trips now when it costs me $0.60 per trip. With the new highway, the cost will be reduced to $0.40, so I am willing to pay up to 30 (0.6 - 0.4) = $6 per month. Do you agree with her reasoning?
Page 2 3. In a study ("Price elasticity in the performing arts" by Kolhede, Gomez-Arias & Maximova 2023) researchers surveyed residents in one California county. They used responses to 28 questions about motivations to attend events to develop motivation factors and then clustered respondents into 3 segments based on their motivations. The authors estimated the performing arts event demand for each segment and calculated the demand elasticities at different prices and reported the following: Elasticities for the 3 segments with a $20 Admission Price were 0.317, 0.343, and 0.317 Elasticities for the 3 segments with a $60 Admission Price were 2.608, 3.269, and 2.590 Unitary Elasticity was at $41.50, $39.18, and $41.58 for the 3 segments Assume that the cost of event production is fixed (not related to attendance). As an economics expert, you are asked to help the performing arts group set ticket prices for next season. a. One committee of the performing arts group wanted to maximize…
If two demand curve intersects, at their point of intersection which demand curve will be more elastic.
Please helo me with this question There are 50 residents that live in a small town in California. Each resident uses electricity and there is one power station that produces electricity for the residents from coal. Each residents' demand for electricity is Q = 10 - 2P and the supply function for the power plant is Q = 150P. For each unit of electricity that the power station produces, there is a corresponding release of pollution that leads to asthma and other health problems for the 50 residents. The marginal damage of each unit of electricity produced, per person, is $.05. a. What is the market equilibrium price and quantity per unit of electricity? b. What is the efficient Pigouvian tax per unit of pollution? c. The government of this small California town decides to impose the efficient Pigouvian per unit tax on the power station. What is the new social optimum price and quantity per unit of electricity? d. What is the government tax revenue? e. What is the gain in total…
In a burns-road food street, there is a youngest 12-year-old entrepreneur. His most recent venture is selling homemade pasta that his mother makes. At price of Rs. 60 each he sells 100. At price 40 each he sells 300. Is this demand elastic or inelastic in this range, explain? If demand has the same elasticity for the price decline from 60 - 40, would cutting the price from 40 to 20 will further increase or decrease his total revenue. Please explain?