Quantity demanded: 100, 80, 60, 40, 20, 10 Price: 5, 10, 15, 20, 25, 30 1. a. De
ID: 1242471 • Letter: Q
Question
Quantity demanded: 100, 80, 60, 40, 20, 10 Price: 5, 10, 15, 20, 25, 30 1. a. Determine the price elasticity of demand at each quantity demanded using the arc or midpoint formula: Percentage change in quantity demanded (Q2 Q1)/Q1 divided by percentage change in price (P2 P1)/P1. b. Redo exercise 1a using price changes of $10 rather than $5. 3. What would a 10 percent increase in the price of movie tickets mean for the quantity demanded of a movie theater if the price elasticity of demand was 0.1, 0.5, 1.0, and 5.0?Explanation / Answer
a)price elasticity of demand = ((100-80)/100)/((5-10)/5 =0.2 similarily other price elasticity of demand =0.67,1,2.5 b)for price change of $10 price elasticities of demand = (100-60)/100 /(5-15)/5 = 0.2 other price elasticity of demand = 0.5,1,1.5 c)for 0.1 -- 0.1*10% = 1% decrease in quantity demanded 0.5 ----0.5*10% = 5% decrease in quantity demanded 1 ----1*10% = 10% decrease in quantity demanded 5---- 5*10% = 50% decrease in quantity demanded