All firms can increase the volume of goods or services sold by cutting prices. But the volume (quantity) of goods or services a firm sells differs from a firm's revenues (price times quantity). Select your firm or a firm not previously discussed. What good or service does the firm sell? Is the price elasticity of demand elastic or inelastic for that good or service? How should the firm alter the price of the good or service to increase revenues?
Movie theaters generally charge the same ticket price for all movies with evening show times, regardless of popularity. This pricing strategy causes surpluses (empty theater seats) for unpopular films and shortages (turning away prospective viewers) for popular films. How can movie theaters improve the pricing strategy to eliminate these inefficiencies? What is a disadvantage to your suggested approach?
Different products have different elasticities. Heart medication, for example, is inelastic, and corn is elastic. Find a product that has not already been selected by another student and describe its price elasticity and income elasticity. How much control might an organization have over pricing based on a product's elasticity? Discuss which of the elasticity rules you used to determine your answer.