Asked by allison brockington on Jun 14, 2024
Verified
When the price of movie tickets in a certain town was reduced, the movie theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of
A) 1.0.
B) greater than 1.
C) 0.5.
D) zero.
Price-Elasticity Coefficient
A measure indicating how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity.
- Understand the concept of unit elasticity and its significance in demand analysis.
Verified Answer
GM
gandharv madaanJun 16, 2024
Final Answer :
A
Explanation :
When the price of movie tickets was reduced and the movie theaters' revenues did not change, it indicates that the percentage decrease in price was exactly offset by a percentage increase in quantity demanded, which is characteristic of a price-elasticity coefficient of 1.0 (unit elastic demand).
Learning Objectives
- Understand the concept of unit elasticity and its significance in demand analysis.