Question

When the price of movie tickets in a certain town was reduced, the movie-theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of
1.0
>1.
0.5
zero

Answer 1

Answer:

Elasticity is 1.0

Explanation:

Price elasticity is a measure of the responsiveness of quantity demanded to changes in prices.

When the ratio of change in quantity to change in price is one, it is unit elastic.

So if price of movie tickets reduce by 5 units the quantity will increase by 5 units.

This will result in same amount of revenue at all prices.

The demand is perfectly elastic.