If at a price of $8, the quantity of movie tickets bought will be 3300 per day, and at $12, the ticket quantity bought will be 2700 per day, then the price elasticity of demand for movie tickets is approximately:
A)0.4
B)0.5
C)0.7
D)2.0
E)2.5

Question

Quizplus · Accepted Answer

Price elasticity of demand formula is:

% change in quantity demanded / % change in price

Using the given information, we can calculate the % change in quantity demanded and % change in price.

% change in quantity demanded: 
(3300-2700) / ((3300+2700)/2) = 600/3000 = 0.2

% change in price: 
(12-8) / ((12+8)/2) = 4/10 = 0.4

Now, we can use these values in the price elasticity of demand formula:

Elasticity = 0.2 / 0.4 = 0.5

Therefore, the price elasticity of demand for movie tickets is approximately 0.5.

If at a Price of $8, the Quantity of Movie