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If the price elasticity of demand for movies by adults is 0.32 and

that by teenagers is 2.5. What do you think the movie theater should do to
increase total revenue?

User Mmed
by
4.1k points

1 Answer

4 votes

Answer:

It means that the price elasticity of demand of movies by teenagers is higher than that of adults.

This means that teenagers will respond more drastically to changes in price, while adults will keep a more or less stable demand even if the price rises or drops.

For this reason, the movie theater should focus on adults, raising the price of films a bit in order to make up for the loss of teenage demand with adult demand.

User DillPixel
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4.2k points