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Suppose the Theatre and Dance Department at OWU is considering changing the way they price tickets for their productions. As the consultant you have classified people who go to the productions of the theatre and dance department into two groups and have come up with two demand functions.
The demand equation for the general public (Qg) and students (Qs) are given below:
Qg=500-5P
Qs=200-4P
a. Find the price elasticity of demand for each group at the current price and quantity
b. Is the theatre department maximizing the revenue it collects from ticket sales by charging $35 for each ticket? Explain
c. What price should they charge each group if they want to maximize the revenue it collects from ticket sales?
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