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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