a.)

Price elasticity of demand= % change in demand or sales/ % change in price

= -3%/ 8%

= -0.375 (inelastic demand)

b.)

Factors, that have contributed to the reduction in attendance;

• Difference in consumer choices.
• Other new play might have been released and it snatched customer attention.
• Income level of consumers in that economy might ave been fallen.

c.)

Theater owner can increase the price because of demand is inelastic. Also because of demand is inelastic, increase in price leads to increase in total revenue.

d.)

Optimal price of a ticket is when elasticity is 1 or when P= MC