Question

Marketing Chapter 3 Test Questions

Answer 1

Step-by-step explanation:

1.) The average nightly ticket sales can be calculated as

Average sales = Average no. of customers per night x Charge per ticket

For the second night, we have

$1750 = (N)($7)

This gives us N = 250.

So, the average number of customers decreased as a result of the price increase.

To calculate the percentage change, we use the following formula:

% change = $\frac{250 -300}{300} X 100$

We have -17% change in the average number of customers the theater has each night. The negative sign indicates a decrease in the number, which is consistent with our calculations.

2.) % change in prices = $\frac{Final price - Initial price}{Initial price} X100$

Therefore, we have 40% change in the cost of ticket per person, which reflects an increase in the prices.

3.) Elasticity of Demand = $\frac{ percentage change in quantity demanded}{percentage change in price}$

Hence, we have $\frac{-17}{40}$ = -0.425

This stands consistent with the Law of Demand - as the price increases, the quantity demanded decreases.

4.) Market price is obtained by looking for a point where the quantity supplied equals the quantity demanded. From the table we see that at $75 price, there is a demand for 45,000 units of that product in that market, which the suppliers are willing to supply. Hence, that defines the market price for that product.