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Answer :
Answer:
2.33 ; demand for movies is elastic
Explanation:
The computation of the price elasticity of demand is presented below:
= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)
where,
Change in quantity demanded is
= Q2 - Q1
= 30 - 15
= 15
And, an average of quantity demanded is
= (30 + 15) ÷ 2
= 22.50
Change in price would be
= P2 - P1
= $8 - $6
= $2
And, the average of price is
= ($8 + $6) ÷ 2
= 7
So, after solving this, the price elasticity of demand is 2.33
Since it is not given by which method we have to calculate it. So, we use the mid point formula.
Based on the above calculation, we concluded that the demand for movies is elastic
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The price elasticity of Based on your results comment on whether movies is :
-The demand for movies is elastic.
"Demand"
Formula :
Price elasticity of demand = (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)
Change in quantity demanded
Change in quantity demanded = Q2 - Q1
Change in quantity demanded= 30 - 15
Change in quantity demanded= 15
Average of quantity demanded
Average of quantity demanded = (30 + 15) ÷ 2
Average of quantity demanded= 22.50
Change in price
Change in price = P2 - P1
Change in price= $8 - $6
Change in price= $2
Average of price
Average of price = ($8 + $6) ÷ 2
Average of price = 7
Price elasticity of demand
Price elasticity of demand = (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)
Price elasticity of demand= (15 ÷ 22.50) ÷ (2 ÷ 7)
Price elasticity of demand=2.33.
Thus, the price elasticity of demand is 2.33 and is elastic in nature.
Learn more about "Price Elasticity":
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