Answer to Question #103659 in Microeconomics for Rodaba Jamshidi

Question

The absolute value of the shortrun price elasticity of demand movie tickets is .85
The absolute value of the longrun price elasticity of demand movie tickets is 3.2
The crossprice elasticity of demand for good X another product sold with respect to the price of movie tickets −.26
The income elasticity of demand movie tickets is .75
refer to elaciticity

If the theater raises movie ticket prices by 10 percent by what percentage and direction will quantity demanded for movie tickets change in short run

Explain why the shortrun price elasticity demand for movie tickets differs from longrun price elasticity demand for movie tickets

What happen total revenue from movie ticket sales in longrun if movie ticket prices increase Explain using relative percentage changes in price/quantity

Are movie tickets normal or inferior good? Explain

Given increase in the price of movie tickets in part (a), what would be impact on demand for good X Use the appropriate graph for good X

Answer 1

If the theater raises movie ticket prices by 10 percent, then quantity demanded for movie tickets will decrease by 10×0.85 = 8.5 percent in short run.

The shortrun price elasticity demand for movie tickets is lower than longrun price elasticity demand for movie tickets, because in longrun it is easier to consumer to change its consumption of particular good.

Total revenue from movie ticket sales will decrease in longrun if movie ticket prices increase, because the demand will be elastic.

Movie tickets is normal good, because its income elasticity of demand is positive.

Given increase in the price of movie tickets in part (a), the demand for good X will decrease, because these goods are complements as the cross-price elasticity of demand is negative.