To conduct an experiment, a movie theater increased movie ticket prices from $9 to $10 and measured the change in ticket sales.
The theater then gathered data over the following month to determine whether the price increase was profitable. Assume total costs to the theater are the same, whether the price of a ticket is $9 or $10. In order for the ticket price to have been profitable over the month, the elasticity of demand for movie tickets must be (INELASTIC OR ELASTIC) .
Demand curves become (MORE OR LESS) elastic in the long run. This means that the ticket price increase will likely be (MORE OR LESS) profitable in the long run.
1. The elasticity of demand for movie tickets must be INELASTIC.
2. Demand curves become LESS elastic in the long run. This means that the ticket price increase will likely be MORE profitable in the long run.
Explanation:
1. As demand is inelastic, the percentage of price increase will be greater than the decrease in the quantity of tickets demanded, and consequently profit will increase.
2. In the long term, demand becomes inelastic. Consequently, in the long term the percentage of the price increase will continue to be greater than the percentage of decrease in the quantity of tickets demanded.
Explanation: A mental model is an explanation of someone's thought process about how something works in the real world and learning a new mental model gives you a new way to see the world. Furthermore, It’s represent the surrounding world, the relationships between its several parts and an individual intuitive perception about his or her own acts and their consequences.
The price you should be willing to pay for this stock= $24.86
Explanation:
To estimate the stock will be worth $50 per share 5 years from now and you require a 15% rate of return for stock investments of this type . Therefore 50= xX1.15^5 by solving this equation we have x= 24.86 . The price you should be willing to pay for this stock= $24.86
