Chapter 1. Chapter 5

Step 1

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

Question

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.

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Demand elasticity measures the responsiveness of quantity to price. It is represented in terms of “percentage change,” which is written as “%∆.”
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Step 2

Question

Suppose that the price of movie tickets increases from $10.50 to $11.50, and the quantity demanded decreases from 2,541,000 to 2,212,000. Using the base method (in which the original value appears in the denominator), if the elasticity of demand is measured as how much is %∆Q? Round the answer to two decimal places. kjTum1HE7IAHyPtZ%

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.
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Step 3

Question

Suppose that the price of movie tickets increases from $10.50 to $11.50, and the quantity demanded decreases from 2,541,000 to 2,212,000. Using the base method (in which the original value appears in the denominator), if the elasticity of demand is measured as how much is %∆P? Round the answer to two decimal places. zuXDGK61JmI=%

Using the percentage change formula, we calculate %∆P = 100% * (11.50-10.50)/10.50.
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Step 4

Question

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Here elasticity is equal to 12.95 divided by 9.52.
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Step 5

Question

We can conclude that movie-ticket demand is nh4JM365URIE2b8gnIp3MpF+8z7UoCwiraQL+ESo8stsBs5b4T1weZBwxc/ihlBvV6A5yb1JMfuJv6rtlsfdxNk0AOVo9yttPfw1ysEuRlE= because this elasticity is sAPw+nngVMpXnkmBon0YD5EspWHR/SHg6S5loi2kPl0EOokQh5X1Q597b+zxFa8oteUTI0Gnr5+HGN5I2zD5/jNoQo0=.

The value of 1.36 is greater than one, but not infinite. It is therefore elastic, but not perfectly elastic.
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