During its run on Broadway, the play The Producers regularly sold out all available tickets at the St. James Theater. The theater could have raised ticket prices from $75 to $125 and still sold all available tickets but chose not to do so
The best explanation for this decision is
A) theater owners do not want to raise their prices on weekends, when demand is high, and then have to lower prices during the week, when demand is lower.
B) firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run.
C) theater owners are unaware of the elasticity of demand for Broadway shows.
D) theater owners are not motivated to maximize their profits.
B
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Robert Lucas, a Nobel laureate in economics, argues that there are increasing returns to
A) knowledge capital. B) human capital. C) physical capital. D) financial capital.
Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?
The Federal Open Market Committee meets approximately
a. every three weeks b. every six weeks c. every 3 months d. every 6 months.
The external costs of alcohol consumption are related to, among other things, death and injury related to auto accidents caused by drunk drivers. These costs have been estimated to be about 47 cents per ounce of alcohol consumed. Taxes on alcohol amount to 23 cents per ounce. This suggests that alcohol consumption is (i) greater than the efficient or optimal amount; (ii) should be reduced to zero to eliminate the externality.
A. i and ii B. i not ii C. ii not i D. neither i nor ii