PRC-3 · Chapter 11 · Question 18 of 57
A cinema increases its ticket prices. Consequently, it notices that its total overall revenue (total expenditure by customers) has actually dropped. According to the total expenditure method, the demand for tickets is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Elastic
Explanation
If a price increase leads to a fall in total revenue, it means the percentage drop in customers was larger than the percentage rise in price, indicating elastic demand.
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