The director of a college theater company is trying to forecast the demand for tickets to her new play. She hired an economic consulting firm and the economists identified two groups of demanders -- the general non-university public (QPublic) and students (QStudents) and estimated each group's demand relationship:
Qgp = 500 - 5P
Qs = 200 - 4p
A. Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $35, identify the quantity demanded by each group.
B. Find the price elasticity of demand for each group at the current price and quantity. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket? Explain.
C. What price should he charge each group if he wants to maximize revenue collected from ticket sales?
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