Final answer:
If a theater is sold out, the quantity of tickets supplied is fixed and cannot be increased for that particular performance, regardless of any changes in ticket prices. Various factors such as alternative entertainment options can lead to a decrease in the demand for movie tickets, while the removal of a tax can increase the quantity supplied. Elastic demand affects how a band might price tickets and seek larger venues.
Step-by-step explanation:
If a theater in Atlanta is sold out for tonight's play, an increase in price of the tickets will not affect the number of tickets sold because the quantity supplied is fixed. A sell-out implies that all available tickets for the event have already been sold, implying that no additional tickets can be supplied regardless of price changes at that time.
Regarding the scenarios provided:
- With the opening of new nightclubs offering no cover charge, the demand for movie tickets falls, suggesting that consumers have a substitute for movies, leading to a decrease in the quantity demanded for movie tickets.
- After the elimination of the entertainment tax, the quantity supplied of movies at any given price increases by 10%. This implies that movie theaters can supply more tickets at the same price, likely due to reduced costs of operation.
The concept of elastic demand as described with the band altering prices manifests when a significant change in the price of tickets results in a proportionately larger change in the quantity demanded. If the demand remains elastic even after selling all 15,000 seats, the band might consider moving to a larger venue to maximize revenue. However, if no larger venue is available or the costs are prohibitive, then they must work within the constraints of the existing venue.