Explaining Cinema Tickets Price Differences Essay - 1

Explaining Cinema Tickets Price Differences - Essay ExampleThe economic principle is known as the Price Elasticity of Demand, which is a measure of how much the quantity inquireed of a good responds to a dislodge in the price of that good. (Mankiw, p. 90). In simple equation formThis principle can be gain ground characterized in two ways. First, student and senior fill for cinema tickets is considered elastic because a change in ticket price has a measurable impact on the quantity demanded. (If there was little or no change in demand in response to a change in price, demand would be termed inelastic.) Also, because in the cinema situation the numerator of the equation is greater than the denominator, the absolute price elasticity of demand must be greater than 1. (If the numerator were larger than the denominator, the absolute price elasticity of demand would be little than 1.)There may be several economic-based reasons why students and seniors atomic number 18 highly responsiv e to cinema pricing. For close people, going to the cinema typically would be considered an optional, not a necessary, activity. So in deciding whether to portion out some of their income to be the cinema most people are more likely to respond to get down prices. Also, many movies eventually are offered on television and DVD, so in deciding whether to allocated some of their income to attending the cinema, most people are more likely to respond to lower prices because they are not risking never seeing the particular movie. Moreover, compared to the average adult, students and seniors are viewed as having less income and so would be more elegant than most people to each of the above factors and thus more likely to spend if ticket prices are lower.