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 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.
B) firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run.
C) theater owners are unaware of the elasticity of demand for Broadway shows.
D) theater owners are not motivated to maximize their profits.
Question 2
Refer to Figure 13-13. If the diagram represents a typical firm in the market, what is likely to happen to its average cost of production in the long run?
A) It will probably fall since the firm must be cost efficient to remain competitive.
B) It will probably rise since the firm will be producing less than its current amount.
C) It will probably rise since its long-run demand is likely to be higher.
D) It will probably fall since the firm will be selling less than its current amount.
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