Step 1

Chapter 1. Chapter05_003

Solved Problems
true
true
You must read each slide, and complete any questions on the slide, in sequence.

Suppose that, if the price of movie tickets increases from $10.50 to $11.50, the quantity demanded decreases from 2,541,000 to 2,212,000.

Which is the correct formula for the elasticity of demand?

A.
B.
C.
D.
Demand elasticity measures the responsiveness of quantity to price. It is represented in terms of “percentage changes,” which is written as “%∆”
3

For the numerator, how much is %∆Q? Round the answer to two decimal places.
The percentage change formula is 100% * (new value – original value) / original value. Here, we calculate %∆Q =100% * (2,212,000 - 2,541,000)/2,541,000
3

For the denominator, how much is %∆P? Round the answer to two decimal places.
Using the percentage change formula, we calculate %∆P = 100% * (11.50-10.50)/10.50.
3

What is the absolute value of the ratio of %∆Q to%∆P? Round the answer to two decimal places.
This is equal to 12.95 divided by 9.52.
3

We can conclude that movie-ticket demand is because this elasticity is .

The value of 1.36 is greater than one, but not infinite. It is therefore elastic, but not perfectly elastic.][This text would appear once BOTH answers are selected.
3