Determine the price elasticity of demand

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Reference no: EM139533

Q. Use the following hypothetical demand schedule for movies to do exercises 1-4.

Quantity Demanded Price Elasticity

100 $5
80 $10
60 $15
40 $20
20 $25
10 $30


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. Illustrate what would a 10 Percentage 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, also 5.0?

Reference no: EM139533

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