Question

II-0. Suppose that your demand schedule for Movie is as below.

Price	Quantity Demanded when income =$10,000	Quantity Demanded when income =$20,000
$5	50	60
$7	40	55
$9	30	50
$11	20	45
$13	10	40

Now the movie ticket price is $7 each. If the ticket price rises to $9 each,

Calculate the price elasticity of demand using midpoint method when your income is $10,000.

Step 1

How much is the change in quantity demanded?       

What is the mid point of the quantities demanded between before and after change? Step 2 How much is the change in price? What is the mid point of the prices between before and after change? Step 3 What is the price elasticity of demand when the price changes from $7 to $9 and your income is $10,000? calculate   - (a/b) / (c/d)   What is the price elasticity of demand?

Calculate the price elasticity of demand using midpoint method when your income is $20,000.

Step 1 -How much is the change in quantity demanded?

What is the mid point of the quantities demanded between before and after change?

Step 2 -How much is the change in price?

What is the mid point of the prices between before and after change?

Step 3-What is the price elasticity of demand when the price changes from $7 to $9 and your income is $20,000?

calculate      - (a/b) / (c/d)

What is the price elasticity of demand?

Answer 1