The director of a theater company in a small college town is considering changing theway he prices tickets. He has hired an economic consulting firm to estimate the demandfor tickets. The firm has classified people who go to the theater into two groups and hascome up with two demand functions. The demand curves for the general public (Qgp)and students (Qs) are given below:QgpQs = 200 - 4P= 500 - 5PFind the price elasticity of demand for each group at the current price andquantity.Is the director maximizing the revenue he collects from ticket sales by charging$35 for each ticket? Explain.What price should he charge each group if he wants to maximize revenuecollected from ticket sales?

# demand function for general public : Q = 500 - 5P # Demand function for students : Q = 200 - 4P…

The 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 for tickets. The firm has classified people who go to the theater into two groups and has come up with two demand functions. The demand curves for the general public (Qgp) and students (Q.) are given below: Qgp = 500 – 5P Qs 2004P = Find the price elasticity of demand for each group at the current price and quantity. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket? Explain

The 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 for tickets. The firm has classified people who go to the theater into two groups and has come up with two demand functions. The demand curves for the general public (Qgp) and students (Q.) are given below: Qgp = 500 – 5P Qs 2004P = Find the price elasticity of demand for each group at the current price and quantity. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket? Explain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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