P3 Cinema

Paper 3 question: Demand and supply elasticity
The 'Old Vic' cinema is one of the most popular movie theatres in the city. 150 years old, the
venue is popular with locals but capacity at the venue is limited, allowing just 150 people to
attend each screening. The owner currently charges either $10 or $15 per per screening and
there are two screenings per day. Demand for tickets is as follows:
Day Demand at $10 Demand at $15 PED

Monday - Thursday 100 25
Friday 150 135
Saturday 150 140
Sunday 150 100
Questions:
(a) Calculate the PED at each of the prices displayed in the table [2]
___________________________________________________________________________
___________________________________________________________________________
(b) Using the information in the table advice the owner of this venue the most appropriate
price for each night of the week. [2]
___________________________________________________________________________
___________________________________________________________________________
(c) Explain why demand for venue tickets is likely to have a lower PED elasticity at
weekends, than on weekdays? [4]
___________________________________________________________________________
___________________________________________________________________________
(d) Calculate the weekly revenue at the following prices: [4]
i. Weekdays $10 and weekends $15
___________________________________________________________________________
ii. $10 both weekdays and weekends
___________________________________________________________________________
© Mark Johnson,
InThinking www.thinkib.net/Economics 1
iii. $15 both weekdays and weekends
___________________________________________________________________________
(e) Explain using a diagram whether the owner might benefit from changing their prices in
order to boost revenues? [4]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(f) Following concerns over the number of emergency exits, the venue is forced to reduce
capacity to 120 seats. Illustrate the effect of this on the market for cinema tickets and explain
the likely impact on prices. [4]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(g) Following the trend of more consumers watching films in the comfort of their own
home, the government is concerned about the economic viability of cinema venues. Using
the data provided and your knowledge of economics, recommend a policy which could be
introduced by the government to support the industry. [10]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
© Mark Johnson,
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
[End of question]
© Mark Johnson,

P3 Cinema

Uploaded by

Copyright:

Available Formats

P3 Cinema

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

P3 Cinema

Uploaded by

Copyright:

Available Formats

What is the price elasticity of demand (PED) and how is it calculated?

How does demand for cinema tickets differ between weekdays and weekends?

Paper 3 question: Demand and supply elasticity

Day Demand at $10 Demand at $15 PED

(d) Calculate the weekly revenue at the following prices: [4]

i. Weekdays $10 and weekends $15

ii. $10 both weekdays and weekends

You might also like