An independent cinema operator estimates that the demand for its premium tickets has a price elasticity of demand (PED) of -0.5 and an income elasticity of demand (YED) of +1.5. Due to a local economic downturn, average consumer incomes in the area are expected to decrease by 4%.
Using the linear approximation for the percentage change in total revenue (%ΔTR≈%ΔP+%ΔQ\%\Delta TR \approx \%\Delta P + \%\Delta Q%ΔTR≈%ΔP+%ΔQ), what percentage change in ticket price is required for the cinema to keep its total revenue from premium tickets unchanged?
A decrease of 4%4\%4%
An increase of 6%6\%6%
An increase of 12%12\%12%
An increase of 4%4\%4%
