Question

2. Famous Cinema Theatres sell the movie tickets for $16 per ticket for evening screenings and sell 250 tickets a night on average. They estimate that the price elasticity of demand for tickets is (negative) 0.8.

Calculate the expected number of tickets sold if they reduce the ticket price to $14.

Answer 1

The expected quantity is

Q2=-0.8*((14-16)/16))*250+250=275