imskpwr wrote:Because of an upcoming increase in the rent for the performance space used by the Greenland Theatre company, the company plans to maximize profits by reducing by one-half the length that each of the shows in its upcoming season will run, from two months to one month. Over 90 percent of the company's regular audience consists of subscribers, and the subscription price will remain the same, as will the number and quality of shows produced. Extensive surveys show that neither subscribers nor advertisers will be lost if the company's plan is instituted.

Which of the following, if true, provides the strongest evidence that the theatre company's profits are likely to decline if the plan is instituted?

The actors' union requires that a company the size of Greenland Theatre must contractually hire actors for a minimum of three months, and shows generally do not require more than a month of rehearsal.

The majority of the company's subscribers are less concerned about a possible drop in the number of performances than they are about a possible decrease in the quality of those performances.

Since Greenland Theatre is one of the few reputable theatre companies in the area, many of the company's subscribers would still renew their subscriptions if the subscription prices increased.

Most of the advertisers that purchase space in the programs for the different productions will continue to spend the same amount on advertising per week as they have in the past.

Production costs, including playwright royalties, fees for designers, and set and costume building expenses, are expected to remain stable.

imskpwr wrote:Because of an upcoming increase in the rent for the performance space used by the Greenland Theatre company, the company plans to maximize profits by reducing by one-half the length that each of the shows in its upcoming season will run, from two months to one month. Over 90 percent of the company's regular audience consists of subscribers, and the subscription price will remain the same, as will the number and quality of shows produced. Extensive surveys show that neither subscribers nor advertisers will be lost if the company's plan is instituted.

Which of the following, if true, provides the strongest evidence that the theatre company's profits are likely to decline if the plan is instituted?

The actors' union requires that a company the size of Greenland Theatre must contractually hire actors for a minimum of three months, and shows generally do not require more than a month of rehearsal.
There are no changs in contract with actors, hence it won't impact the profit of the company.
The majority of the company's subscribers are less concerned about a possible drop in the number of performances than they are about a possible decrease in the quality of those performances.
It's mentioned that quality of shows will not decline as well as the subscribers. Hence no impact on profit.
Since Greenland Theatre is one of the few reputable theatre companies in the area, many of the company's subscribers would still renew their subscriptions if the subscription prices increased.
This will add to the progit of the company.
Most of the advertisers that purchase space in the programs for the different productions will continue to spend the same amount on advertising per week as they have in the past.
Things to note in the question is that number of shows will not decrease but total duration will be one month instead of two months. Since Ad comp are not going to increase the amount, they will now pay for 4 weeks as opposed to 8 weeks. Correct.
Production costs, including playwright royalties, fees for designers, and set and costume building expenses, are expected to remain stable.
No impact on profit.