A research firm findings concluded that the price elasticity of demand for movie tickets is elastic in the afternoon but inelastic in the evenings. Given this information, to increase overall revenue the theater owners should.

The correct answer is letter "B": Reduce the ticket prices for the afternoon shows and increase the ticket prices for the evening shows.

Explanation:

Price elasticity of demand is a characteristic of goods and services by which the quantity demanded changes in front of changes in their price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the result is equal to or greater than one (1) the demand is elastic. If the result is lower than 1, the demand is inelastic.

Thus, in an attempt to increase revenue out of movie tickets sales, if the demand for movie tickets is elastic in the afternoon it implies that changing the price would significantly change the quantity demanded. Then, it would be convenient to lower the tickets cost so the quantity demanded increases in the afternoon -demand law.

Then, if the demand for movie tickets is inelastic in the evenings, it means changes in prices do not change the quantity demanded. So, increasing the price of movie tickets in the evenings would not change the quantity demanded.

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