Q1. You are the manager of a theater. At present the theater charges the same admission price of $8 to all customers, regardless of age. You propose a two-tier pricing scheme: $5 for children under the age of 12 and $10 for adults. You tell your supervisor that your proposal is likely to increase revenues. • What must be true about the price elasticity of demand for adults if your proposal is to achieve its goal of raising revenue? Explain your reasoning. (3pts) • What must be true about the price elasticity of demand for children if your proposal is to achieve its goal of raising revenue? Explain your reasoning. (2pts)
a)
In this case, price for adults is increased. It is done with a goal to increase the revenue.
An increase in price can increase the revenue if price effect is stronger than the quantity effect. It is possible in case of inelastic demand. We can say that demand is inelastic for adults.
b)
In this case, price for children is decreased. It is done with a goal to increase the revenue.
An decrease in price can increase the revenue if quantity effect is stronger than the price effect. It is possible in case of elastic demand. We can say that demand is elastic for children.
Q1. You are the manager of a theater. At present the theater charges the same admission...
2. Suppose that you run the only movie theater in a small town – it is a monopoly in your area. On occasion you have given discounts to students from a nearby college (they have to show their college ID to get the discount and to enter the theater). From analyzing your sales data over time, you realize that your customers have differing price elasticities of demand – movie goers who are not students have a price elasticity of demand...
You are the manager of the public transit system. You are informed that the system faces a deficit, but you cannot cut service, which means you cannot cut costs. Your only hope is to increase revenue by increasing fares. You are advised that the estimated price elasticity of demand, several years after the price change, will be about −1.5. Select the statement that best describes the results of raising the fare in the long run. A. total revenue rises immediately,...
You are the manager of the public transit system. You are informed that the system faces a deficit, but you cannot cut service, which means you cannot cut costs. Your only hope is to increase revenue by increasing fares. You are advised that the estimated price elasticity of demand for the first few months after a price change is about −0.3. Select the statement that best describes the results of raising the fare in the short run. Total revenue rises...
You are the manager of the public transit system. You are informed that the system faces a deficit, but you cannot cut service, which means you cannot cut costs. Your only hope is to increase revenue by increasing fares. You are advised that the estimated price elasticity of demand, several years after the price change, will be about −1.5. Select the statement that best describes the results of raising the fare in the long run.
You are the curator of a butterfly sanctuary. The sanctuary is running low on funds, so you decide to increase revenue. What options do you have to consider? Should you raise or lower the price of admission? Explain your reasoning in terms of demand and elasticity. please keep in mind this is a macroeconomics class and please make sure its no less then two paragraphs and relates to macroeconomics thank you! I Will rate well!
Manager 1: "The only way we can increase the revenue we received from selling iPhone is by cutting the price." Manager 2: "That might work for Samsung phone, but it will not work for iPhone. For iPhone, we must increase the price." Explain the type of elasticity of demand (Ed) and give reasons to support whether you agree or disagree with Manager 2's reasoning.
After coming up with an innovative idea for a new product, you paid $4000 to an industrial designer to draw the blueprints and found a factory in China that agreed to produce the product for you for $3 per unit (the price includes the shipping cost from China to you). Since this is a totally new and unique product, you have no idea how the demand for it would be. Therefore, before you start pricing the product and ordering large...
Suppose that you are a financial manager for a large electronic manufacturing in Malaysia. Define the concept of price elasticity of demand and explain what it tells us about total revenue (support with your own appropriate table and figures)
After coming up with an innovative idea for a new product, you paid $4000 to an industrial designer to draw the blueprints and found a factory in China that agreed to produce the product for you for $3 per unit (the price includes the shipping cost from China to you). Since this is a totally new and unique product, you have no idea how the demand for it would be. Therefore, before you start pricing the product and ordering large...
After coming up with an innovative idea for a new product, you paid $2000 to an industrial designer to draw the blueprints and found a factory in China that agreed to produce the product for you for $3.5 per unit (the price includes the shipping cost from China to you). Since this is a totally new and unique product, you have no idea how the demand for it would be. Therefore, before you start pricing the product and ordering large...