Question

Price of movie tickets 5) D FIN 910 IND Thousands of movie tickets Figure 3 7) Refer to Figure 3 above. How do total expenditures on movie tickets vary along the demand curve? A)Since quantity demanded increases as price decreases, total expenditures increase. B)Since the quantity is sold at lower and lower prices, total expenditures decrease as quantity demandedincreases. C)Total expenditures remain the same between points along the demand curve. D)Total expenditures increase through the upper portion of the curve and then decrease at low pricelevels. 8) Refer to Figure 3 above. The elasticity of the demand for the curve in the figure can be described as: A)elastic in the upper portions of the curve and inelastic in the lower portions. B)a special case of an isoelastic curve called the unit-elastic demand curve. C)elastic throughout the curve. D)inelastic throughout the curve.

Answer 1

Total Revenue = Price * Quantity demanded

Elasticity is calculated as %change in quantity demanded / %change in price

Price	Quantity Demanded	Total Revenue	%change in price	%change in quantity demanded	Elasticity
3	1800	5400	-	-
6	900	5400	100%	-50%	-0.5
9	600	5400	50%	-33%	-0.66

7) Total revenue remains the same between points along the demand curve which can be seen in the above table. Option C is correct.

8) If %change in quantity demanded < %change in price, demand is elastic and consumers are not willing to reduce their quantity demanded when price rises. In the above table, we can see that demand curve is inelastic throughout the curve. Option D is correct.