APPLYING ELASTICTIY OF DEMAND
Movie Ticket Revenue and Demand Elasticity
Price
per
Ticket
Quantity
Demanded
Total
Revenue
$5.00
10,000
$50,000
$4.50
22,500
$101,250
$4.00
30,000
$120,000
$3.50
31,200
$109,375
$3.00
32,000
$97,500
$2.50
33,750
$84,375
Quantity Demanded (thousands)
(1) During a one-month time period, how many tickets are sold at the price of $4? ________________
(2) What is the total revenue earned by the movie theaters at $4? ___________________
(3) How many tickets are sold when the price is increased to $5? ______________________
(4) What is the total revenue earned by the movie theater at $5 ______________________
(5) Why does the total revenue decrease when the price for the movie tickets is raised?
(6) What is the difference between the number of tickets sold at $4 and $5? ____________________
(7) Does this change in price represent elastic or inelastic demand? ___________________
(8) How many tickets are sold at the price of $2.50? _________________ How many tickets are sold
at $3.50? ________________ What is the difference between the numbers of tickets sold at those
prices? ________________
(9) Does this change in price ($2.50 to $3.50) represent elastic or inelastic demand? _______________
(10) At this point in time and for this market, what price should movietheater owners charge to get the
highest total revenue? __________________
Name _________________________________________ Per ____ Date _______________
Identifying Elasticity
Directions – Identify whether each good is elastic or inelastic and explain why using the
characteristics of elastic and inelastic demand.
1) A Subway Sandwich 2) A box of matches 3) Deodorant 4) Gap Jeans 5) Movie Theater Tickets 6) Gasoline 7) Pillows –
8) Laptop Computers 9) Cameras (general) –
10) Pork Chops 11) iPods –
12) Trip to Italy -
Directions – For #13, please think of a good that is elastic and explain why. For #14, think of a good
that is inelastic and explain why.
13)
14)