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economics

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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.

  • economics -

    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.

  • economics -

    yes

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