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Vika
2 months ago
5

When the price of a movie ticket rises from $6 to $8 for senior citizens, Gary (a senior citizen) decides to go to the movies ev

ery other day (15 times per month) instead of every day (30 times per month). Calculate the price elasticity of Based on your results comment on whether movies are elastie or tickets? demand for movie inelastic?
Business
1 answer:
arsen [3.4K]2 months ago
7 0

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.

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