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(a) [10 points] A local movie theater charges $10 per ticket; it also averages about $8 in prot from concessions for each ticket sold. Based
(a) [10 points] A local movie theater charges $10 per ticket; it also averages about $8 in prot from concessions for each ticket sold. Based on some past experimentation with ticket prices, the manager has learned that moviegoers' concessions purchases do not respond to their ticket prices (they always spend roughly the same amount, regardless of ticket price); in addition, she has estimated that the elasticity of demand for tickets at the current price of $10 is approximately -0.6. What happens to box ofce revenue if the theater increases ticket prices from $10 to 51512? What happens to concession prots if the theater increases ticket prices to $12? If the theater wants to maximize the sum of box ofce and concession prots, should they raise ticket prices to $12
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