Question

1. Suppose the price of movie seen at a theater rises from ₹120 per person to ₹200 per person, thee theater manager observes that the attendance for the movie reduces from 300 persons to 200 persons. Calculate price elasticity for the movie.
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Answer 1

Explanation:

∆Q= 300-200= 100

∆P= 200-120= 80

Q = 300

P= 120

∆= change symbol

price elasticity = ∆Q/∆P×P/Q

= 100/80×120/300

= 1.25×0.4

= 0.5

0.5 is a price elasticity of demand