Find the price elasticity of demand for each group at the

Assignment Help Microeconomics
Reference no: EM13321598

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 (Qs) are given below:

Qgp = 500 -5P

Qs = 200 -4P

a. Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $35, identify the quantity demanded by each group.

b. Find the price elasticity of demand for each group at the current price and quantity.

c. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket? Explain.

d. What price should he charge each group if he wants to maximize revenue collected from ticket sales?

Reference no: EM13321598

Questions Cloud

Can you tell from the available information which product : Can you tell from the available information which product will generate the most revenue? If yes, why? If not, what additional information do you need?
The introduction of the companies of the websites : Choose any site (depending on instructor) of the same industry from Qatar. Evaluate the web sites based on the criteria given below and write a report. Start your assignment with the introduction of the companies of the websites.
Explain the organic compound di-n-butyl phthalate : The organic compound di-n-butyl phthalate, C16H22O4(l), is sometimes used as a low-density (1.046 g·mL-1) manometer fluid. Compute the pressure (in torr) of a gas that supports a 499-mm column of di-n-butyl phthalate.
What is judy price elasticity of demand for textbooks : Judy has decided to allocate exactly $500 to college textbooks every year, even though she knows that the prices are likely to increase by 5 to 10 percent per year and that she will be getting a substantial monetary gift from her grandparents next ye..
Find the price elasticity of demand for each group at the : 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.
What is the corresponding range of wavelengths : The dial on an FM radio contains numbers ranging from about 88 to about 108. What is the corresponding range of wavelengths
Draw the appropriate price-consumption and income-consumptio : Orange juice and apple juice are known to be perfect substitutes. Draw the appropriate price-consumption curve (for a variable price of orange juice) and income-consumption curve.
How fast will she be moving at the bottom of the swing : A 28.0kg child plays on a swing having support ropes that are 2.10m long. How fast will she be moving at the bottom of the swing
Explain the density of the gas in l and the molar mass : 2.55 g of an unknown gas at 39 degrees celsius and 1.05 atm is stored in a 1.95-L flask. What is the density of the gas in L and the molar mass of the gas in g/mol

Reviews

Write a Review

Microeconomics Questions & Answers

  Description of public administration

Public administration can't exist outside of its political context. Describe how politics affects the policy making process and the delivery of governmental services.

  What your colleague considers a low risk loan.

A colleague tells you that he can get a business loan from the bank, but the rates seem very high for what your colleague considers a low risk loan. a. Give an adverse selection explanation for this, and offer advice to your friend on how to solve ..

  What impact that statute would have on auto manufacturers

On the evening of the vote, local union officials voiced serious objections to this statute. Outline the basis of the argument most likely used by union officials.

  Calculate domestic equilibrium price and output combination

Assuming the industry is perfectly competitive, calculate the domestic equilibrium price and output combination and Is the outcome in part B desirable from society's viewpoint

  What is the expected demand for gasoline at the end of this

At the beginning of this year, daily consumption of gasoline in the US amounted to 344 million gallons. It is estimated that for every 10% increase in the price of gasoline, the demand for gasoline reduces by 2.00%.

  What are the potential consequences of a country

What are the potential consequences of a country having a large overall national or public debt? If you were in the position to implement a solution for the country's long-term debt, what would it be and why?

  How would you go about resolving the issue of poor country

For a developing country to grow, it needs capital. The major source of capital in most countries is domestic saving, but the goal of stimulating domestic saving usually is in conflict with government policies aimed at reducing inequality

  Arnold corporation has been authorized to issue

Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%,noncumulative preferred stock and 2,000,000 shares of no-par common stock

  Relationship between productivity and cost of production

What is the relationship between productivity and the cost of production, and how does the cost of production vary over the short- and long-run?

  How high would transportation costs-tariffis have to be

allows foreign customers to purchase them by mail for price v2 where v1, v2 are the domestic and foreign reservation prices The problem is that frequent travelers are tempted to purchase the CD players domestically, then sell them overseas. Assume..

  Find direct expenditure off set than spending on health care

1. Why might federal spending on roads, waterways, or national security be less subject to direct expenditure off sets than spending on health care or education 2.What might account for the fact that estimates of effect time lags for fiscal p..

  Calculation of cross-price elasticity of demand

Sandra purchases 5 pounds of coffee and 10 gallons of milk per month when the price of coffee is $10 per pound. She purchases 6 pounds of coffee and 12 gallons of milk per month when the price of coffee is $8 per pound.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd