A cinema increases the price of its tickets from R100 to R120. Following the increase, the number of tickets demanded decreases from 1,000 to 700 per week. Using the percentage-change method, calculate the approximate price elasticity of demand and determine whether the cinema should expect total revenue to increase or decrease.

Question

Answer

PED = 2.14; demand is elastic and total revenue decreases.

Answer

PED = 0.67; demand is inelastic and total revenue increases.

Answer

PED = 0.47; demand is inelastic and total revenue decreases.

Answer

PED = 1.5; demand is elastic and total revenue decreases.

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A cinema increases the price of its tickets from R100 to R120. Following the inc...

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