Presently the theater advertises 125 times per week

Assignment Help Business Economics

Reference no: EM13150050

$15 dollar tip if delivered within next hour!

The following equation represents the weekly demand that a local theater faces.

Qd = 2000 - 25 P + 2 A,
where P represents price and A is the number of weekly advertisements.
Presently the theater advertises 125 times per week. Assuming this is the only theater in town, and its marginal cost, MC, is equal to zero,

a. Determine the profit maximizing ticket price for the theater.
b. What is the price elasticity of its demand at this price?
c. What is the elasticity of its demand with respect to advertising?
d. Now suppose the theater increases the number of its ads to 250. Should the theater increase its price following this ad campaign? Explain.

Reference no: EM13150050

Questions Cloud

When the law of diminishing returns takes effect : Indicate whether each of the following statements is true or false. Explain why. a. When the law of diminishing returns takes effect, a firm’s average product will start to decrease

Amount of cost in ending work in process inventory : The beginning work in process inventory had a balance of $2,000. There were $42,000 of product costs added to work in process during the period. The amount of cost in ending work in process inventory is ??

Third quarter financial statements : On September 30 a company needed to estimate its ending inventory to prepare its third quarter financial statements. The following information is available:

What types of strategic alternatives might such organization : Imagine a nonprofit organization trying to raise funds for cancer research. What types of strategic alternatives might such an organization develop?

Presently the theater advertises 125 times per week : where P represents price and A is the number of weekly advertisements. Presently the theater advertises 125 times per week. Assuming this is the only theater in town, and its marginal cost, MC, is equal to zero,

Why is it often difficult to develop a realistic analysis : Why is it often difficult to develop a realistic analysis?

Prepare a return on investment analysis for regional manager : prepare a return on investment analysis for the regional manager of Out-and-In Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield an..

Find equivalent act score if sat score is given : Assume that the two tests use different scales to measure the same aptitude. If a woman gets a SAT score of 1220, find her equivalent ACT score.

How can on protein kinase control : In yeast, there is a single CDK that catalyzes both the G1/S and G2/M transitions. How can on protein kinase control these two very different cell cycle transitions?

User Account

All Pages