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Unitiii assignmentworksheet 2

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Unit III Assignment Worksheet
Background Information
The Ruby Red Movie Theater in town is in jeopardy of having to close its doors because it is
unable to generate enough total revenue. In an effort to generate more total revenue, the
movie theater manager decided to change the prices this month for drinks, popcorn, candy, hot
dogs, and movie tickets.
The manager would like for you to analyze the data that has been collected to help decide if the
decisions to change the prices were correct and, if not, what should be done to prices to
generate more total revenue. Be sure to answer all of the questions in this worksheet.
Question 1
Information regarding the community’s average income and movie ticket sales at the Ruby
Red Movie Theater for both last year and this year are presented below. Use this information
when answering questions AC, below.
Last Year
This Year
Community’s Average Income
$55,800
$57,474
Movie Ticket Sales
$4,980
$5,021
A. Calculate the Income Elasticity of Demand for movie tickets. (Show your work. You can type
it in the box below, or write it out by hand, take a picture, and insert the picture in the box.
Make sure it fits in the box. NOTE: These options apply to all “Show your work” responses.)

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B. Are movie tickets considered to be inferior goods, normal goods, or unit (unitary) goods in
this town? Explain why.
Movie tickets are considered to be normal good, because its income elasticity of demand is
positive
``
C. A new firm is relocating to the city and adding a large number of above average salaries.
Will the number of movie ticket sales for the theater increase, decrease, or remain
constant? Base your answer on information you answered in part B above.
The number of movie ticket sales for the theatre will increase. With increase in average
salaries, people’s purchasing power will increase, resulting to increase in movie ticket sales.
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Unit III Assignment Worksheet Background Information The Ruby Red Movie Theater in town is in jeopardy of having to close its doors because it is unable to generate enough total revenue. In an effort to generate more total revenue, the movie theater manager decided to change the prices this month for drinks, popcorn, candy, hot dogs, and movie tickets. The manager would like for you to analyze the data that has been collected to help decide if the decisions to change the prices were correct and, if not, what should be done to prices to generate more total revenue. Be sure to answer all of the questions in this worksheet. Question 1 Information regarding the community’s average income and movie ticket sales at the Ruby Red Movie Theater for both last year and this year are presented below. Use this information when answering questions A–C, below. Last Year This Year Community’s Average Income $55,800 $57,474 Movie Ticket Sales $4,980 $5,021 A. Calculate the Income Elasticity of Demand for movie tickets. (Show your work. You can type it in the box below, or write it out by hand, take a picture, and insert the picture in the box. Make sure it fits in the box. NOTE: These options apply to all “Show your work” responses.) B. Are movie tickets considered to be inferior goods, normal goods, or unit (unitary) goods in this town? Explain why. Movie tickets are considered to be normal good, because its income elasticity of demand is positive `` C. A new firm is r ...
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