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Economics

CPT 525 views 3 replies

R.Pavithra

Student CA CPT

48 Points Joined October 2012

Elasticity of demand

suppose the price of movies seen at a theatre rises from rs 120 per person to 200 rs per person.The theatre manager observes that the rise nprice causes attendance at a given movie to fall from 300 persons to 200 persons.What is the price elasticity of demand for movies ?

Is the answer 0.5 or 0.8

Replies (3)

Shubham kumar

620 Points Joined January 2012

100/500x320/-80= 0.8

harish ragav

student-IPCC

407 Points Joined April 2012

CAN U PLS EXPLAIN HOW IT IS

Shubham kumar

620 Points Joined January 2012

formula for calculating ed is q1-q2/q1+q2xp1+p2/p1-p2.. .. .. .. Where q1=original quantity demanded and q2=new Quantity demanded. Similarly, p1=original price and p2=new price. . . . . . so, now put the above data in this and you'll get answer.