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Suppose the price elasticity of demand for movies is -1.5. If the price of movies increase...

Suppose the price elasticity of demand for movies is -1.5. If the price of movies increase by 20%, by what percent would you expect the quantity demanded to decrease? Show your work

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Answer #1

Answer

the elasticity of demand =(%change in quantity/%change in price)

using the given values

-1.5=(%change in quantity/20)

%change in quantity =-1.5*20=-30%

the minus sign shows the decrease

the demand for movie tickets decreases by 30%

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