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Imagine you own a movie theatre. You decide to sell tickets to Star Wars. You notice that teenagers have a price elasticity of demand equal
Imagine you own a movie theatre. You decide to sell tickets to Star Wars. You notice that teenagers have a price elasticity of demand equal to -2.5 while adults have a price elasticity of demand equal to -1.2. You should do the following:
A. | maximize revenue by setting MR=0 and identifying the price that goes along with the revenue maximizing quantity | |
B. | charge a higher price to adults | |
C. | experiment with various combinations to obtain efficiency | |
D. | charge a lower price to adults |
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