If the owners of ster kinekor movie theatres discounted the price of admission fees by 30 per cent, average attendance would rise by 50 per cent. based on this data, it could be concluded that the price elasticity of demand for movie tickets is?
Question: If the owners of ster kinekor movie theatres discounted the price of admission fees by 30 per cent, average attendance would rise by 50 per cent. based on this data, it could be concluded that the price elasticity of demand for movie tickets is?
To calculate the price elasticity of demand for movie tickets, we can use the following formula:
Price Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price
In this case, the percentage change in quantity demanded is 50% and the percentage change in price is -30% (since the price is being discounted). Therefore, the price elasticity of demand is:
Price Elasticity of Demand = 50% / -30% = -1.67
A price elasticity of demand of -1.67 indicates that the demand for movie tickets is elastic. This means that a small change in price will result in a relatively large change in quantity demanded.
In conclusion, if the owners of Ster Kinekor movie theatres discounted the price of admission fees by 30 per cent, average attendance would likely rise by 50 per cent, as the demand for movie tickets is elastic.
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