Answer:
2.33; the demand for movies is elastic
Explanation:
Below is the calculation for price elasticity of demand:
= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)
Here, the change in quantity demanded is defined as
= Q2 - Q1
= 30 - 15
= 15
The average quantity demanded is
= (30 + 15) ÷ 2
= 22.50
The change in price is computed as
= P2 - P1
= $8 - $6
= $2
And the average price is
= ($8 + $6) ÷ 2
= 7
Thus, after computing, the result for price elasticity of demand is 2.33
As we were not instructed on the method for calculation, the mid-point formula was utilized.
From this calculation, we deduce that the demand for movies is indeed elastic.
