Economics Discussion Assignment PaperUnit III Assignment WorksheetBackground InformationThe 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 1Information 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 YearThis YearCommunity’s Average Income$55,800$57,474Movie Ticket Sales4,9805,021A. 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.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.Continue on next pageQuestion 2The manager at Ruby Red Movie Theater decided to change the prices of concession stand items as well as tickets this month in an effort to increase revenues. Below, you are provided with prices for last month and this month as well as the quantities demanded for both months. Use this information when answering questions A–H below.PriceQuantity DemandedItemLast MonthThis MonthLast MonthThis MonthLarge Drink$6.00$5.50150161Large Popcorn$7.50$8.00125101Small Drink$2.50$2.007580Small Popcorn$5.00$5.254539Candy$4.00$3.505768Hot Dog$5.00$5.253536Movie Ticket$8.00$9.00428300A. Calculate the total revenues earned by the theater last month and this month (Show your work.)Total revenues last month =Total revenues this month =B. Calculate the price elasticity of demand for large drinks. (Show your work.)Is the price elasticity of demand for large drinks price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageC. Calculate the price elasticity of demand for large popcorn. (Show your work.)Is the price elasticity of demand for large popcorn price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageD. Calculate the price elasticity of demand for small drinks. (Show your work.)Is the price elasticity of demand for small drinks price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageE. Calculate the price elasticity of demand for small popcorn. (Show your work.)Is the price elasticity of demand for small popcorn price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageF. Calculate the price elasticity of demand for candy. (Show your work.)Is the price elasticity of demand for candy price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageG. Calculate the price elasticity of demand for hot dogs. (Show your work.)Is the price elasticity of demand for hot dogs price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageH. Calculate the price elasticity of demand for movie tickets. (Show your work.)Is the price elasticity of demand for movie tickets price elastic, inelastic, or unit (unitary)? Briefly explain why in the box below.Answer =Continue on next pageQuestion 3Based on the relationship between price elasticity of demand and total revenues, evaluate whether the individual price changes the manager made were correct or not. Remember, Ruby Red Movie Theater wants to increase total revenue.A. Was the decision to decrease the price of large drinks appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =B. Was the decision to increase the price of large popcorn appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =C. Was the decision to decrease the price of small drinks appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =D. Was the decision to increase the price of small popcorn appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =E. Was the decision to decrease the price of candy appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =F. Was the decision to increase the price of hot dogs appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =G. Was the decision to increase the price of movie tickets appropriate to increase total revenues? Why, or why not? Briefly explain in the box below.Answer =

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