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.
Dear visitor, please use panel for submitting new questions
Describe the difference between average revenue and marginal revenue. Why are both of these revenue measures important to a profit maximizing firm?