he CEO of Globe Movie Theatre Limited has hired you as a consultant to advise on the ticket-pricing strategy. As a basis of your recommendations, you consider the historical ticket-sales data which seems to suggest the following ticket-sales elasticities: Own-price elasticity = -0.05 Refreshment price elasticity = -0.12 Nairobi population elasticity = +0.67 Advertising elasticity = +0.70 i)The CEO is contemplating a moderate increase in ticket prices in order to increase revenue. Explain whether this is a good idea. ii)The CEO is contemplating a moderate increase in the advertising budget in order to increase revenue. Is this a good idea? Explain. If the population of Nairobi increased from 2million to 2.2million in the next one year, what would be the resulting impact on ticket demand? Assume all other factors are held constant.
he CEO of Globe Movie Theatre Limited has hired you as a consultant to advise on the ticket-pricing strategy. As a basis of your recommendations, you consider the historical ticket-sales data which seems to suggest the following ticket-sales elasticities: Own-price elasticity = -0.05 Refreshment price elasticity = -0.12 Nairobi population elasticity = +0.67 Advertising elasticity = +0.70 i)The CEO is contemplating a moderate increase in ticket prices in order to increase revenue. Explain whether this is a good idea. ii)The CEO is contemplating a moderate increase in the advertising budget in order to increase revenue. Is this a good idea? Explain. If the population of Nairobi increased from 2million to 2.2million in the next one year, what would be the resulting impact on ticket demand? Assume all other factors are held constant.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 10E
Related questions
Question
- a)The CEO of Globe Movie Theatre Limited has hired you as a consultant to advise on the ticket-pricing strategy. As a basis of your recommendations, you consider the historical ticket-sales data which seems to suggest the following ticket-sales elasticities:
Own-
Refreshment price elasticity = -0.12
Nairobi population elasticity = +0.67
Advertising elasticity = +0.70
- i)The CEO is contemplating a moderate increase in ticket prices in order to increase revenue. Explain whether this is a good idea.
- ii)The CEO is contemplating a moderate increase in the advertising budget in order to increase revenue. Is this a good idea? Explain.
If the population of Nairobi increased from 2million to 2.2million in the next one year, what would be the resulting impact on ticket
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
