During Its Run on Broadway, the Play the Producers Regularly

question 157

Multiple Choice

During its run on Broadway, the play The Producers regularly sold out all available tickets at the St.James Theater.The theater could have raised ticket prices from $75 to $125 and still sold all available tickets but chose not to do so.The best explanation for this decision is

• A)theater owners are unaware of the elasticity of demand for Broadway shows.
• B)theater owners do not want to raise their prices on weekends, when demand is high, and then have to lower prices during the week, when demand is lower.
• C)firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run.
• D)theater owners are not motivated to maximize their profits.

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Definitions:

Trade

The action of buying, selling, or exchanging goods and services between people, firms, or countries.

Government Revenue

The income received by the government from various sources, including taxes, fees, fines, and the sale of goods and services.

Tariff

A tax imposed by a government on imported goods or services to protect domestic industries or to generate revenue.

Producer Surplus

The difference between what producers are willing to sell a good for and the price they actually receive.