The owner of a movie theater found that when he raised ticket prices 10%, he sold 20% more tickets. What kind of elasticity does this response indicate?
A) demand for the ticket is elastic.
B) demand for the tickets is inelastic.
C) demand for the tickets is unit elastic.
D) demand for the tickets has no elasticity.

Question

Quizplus · Accepted Answer

When a 10% increase in price leads to a 20% increase in quantity demanded, it is indicative of elastic demand. This means that consumers are relatively sensitive to changes in price, and a small increase in price leads to a larger decrease in quantity demanded.

The Owner of a Movie Theater Found That When He