1. If average movie attendance is 250 million when prices are $7 a ticket and 200 million when prices are $9 a ticket, the elasticity of demand for movie tickets is about:
A. 0.0.
B. 0.9.
C. 1.1.
D. 1.8.
elasticity demand= dq/Q / dp/P
= ( old-new)/old / (oldp-newP)/old
= (250-200)/250 / (7-9)/7
= 50*7/250*2=350/500=.7
Somehow, I suspect the write of this question did this:
elasticity=(0ld-new)/NEW /(oldP-newP)/OLD
and got this: 50/200 / 2/9=350/400= .875 or answer B.
check with your instructor on this.
yes
To determine the elasticity of demand, we can use the following formula:
Elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in price)
First, let's calculate the percentage change in quantity demanded:
Change in quantity demanded = 250 million - 200 million = 50 million
Percentage change in quantity demanded = (Change in quantity demanded / Initial quantity demanded) * 100 = (50 million / 250 million) * 100 = 20%
Next, let's calculate the percentage change in price:
Change in price = $9 - $7 = $2
Percentage change in price = (Change in price / Initial price) * 100 = (2 / 7) * 100 ≈ 28.57%
Now, we can calculate the elasticity of demand:
Elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in price) = 20% / 28.57% ≈ 0.7
Therefore, the approximate elasticity of demand for movie tickets is B. 0.9.
To find the elasticity of demand, we can use the midpoint formula:
Elasticity of Demand = (ΔQ / Q) / (ΔP / P)
where ΔQ is the change in quantity, Q is the original quantity, ΔP is the change in price, and P is the original price.
In this case, we have:
ΔQ = (200 million - 250 million) = -50 million
Q = (200 million + 250 million) / 2 = 225 million
ΔP = ($9 - $7) = $2
P = ($9 + $7) / 2 = $8
Plugging these values into the elasticity formula, we get:
Elasticity of Demand = ((-50 million / 225 million) / ($2 / $8))
Simplifying, we have:
Elasticity of Demand = (-0.22 / 0.25)
The elasticity of demand is approximately -0.88.
Now, to determine the absolute value of the elasticity (since elasticity is always positive), we take the absolute value:
Absolute value of Elasticity = |-0.88| = 0.88
Therefore, the elasticity of demand for movie tickets is approximately 0.88.
However, none of the given answer options match this result exactly.