Question

Fewer Americans Go to the Movies

"A report from the Motion Picture Association of America released Tuesday said that domestic movie box-office sales rose to $10.9 billion last year, from $10.8 billion in 2012.

But the increase was the result of higher ticket prices, not attendance. Indeed, the number of tickets sold slipped yet again, this time 1.5% to 1.34 billion from 1.36 billion.

That extends a longstanding trend: The number of tickets sold fell nearly 11% between 2004 and 2013, according to the report, while box office revenue increased 17%...

The average U.S. movie ticket price in 2013 increased to $8.13, up from $7.96 the year prior, according to the National Association of Theatre Owners, the industry group representing North American cinemas. ..."

Work cited:

Schwartzel, Erich, and Ben Fritz. "Fewer Americans Go to the Movies." Wall Street Journal, Mar 26, 2014. ProQuest, http://ezproxy.lib.umb.edu/login?url=https://search-proquest-com.ezproxy.lib.umb.edu/docview/1509988254?accountid=28932.

What does this article say about the price elasticity of demand?

Answer 1

As per the report from article provided, despite an increase in ticket price that is leading to a decrease in number of tickets purchased, total revenue from ticket sale is increasing. It means that if ticket price increases by N%, quantity demanded of tickets decreases by less than N%, leading to an increase in total revenue. This signifies that absolute value of price elasticity of demand (= % Change in number of tickets sold / % Change in price) is less than 1, so demand is inelastic.

[Since the external link is not required as the article itself has been provided, the question has been answered]