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Hollywood Amusement, a Small Independent Movie Theater, Decreased the Price

question 29

Multiple Choice

Hollywood Amusement, a small independent movie theater, decreased the price of admission from $5 to $4. Prior to the price decrease, the business sold 1,000 tickets each month. After the price decrease, it experienced ticket sales of 1,500 a month. If the change in sales is attributable only to the change in price, Hollywood Amusement faces ____ for its movie tickets.


Definitions:

Cost of Capital

A company's expense of funding its operations either through debt, equity, or a combination, representing the return rate investors expect.

Tax Rate

The level at which a person or business's income is subjected to taxation.

Bonds at Par Value

Bonds that are sold or traded at their original issuing price or face value.

Equity Financed

Refers to the method of raising capital for a business by selling ownership shares in the company, as opposed to incurring debt.

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