If people spend 30 percent less on movie tickets when movie prices decline 15 percent, the price elasticity of demand for movie tickets at these prices must be
A) −3.0.
B) elastic
C) −0.5.
D) inelastic.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, a 15% decrease in price leads to a 30% increase in quantity demanded, resulting in an elasticity of -30% / -15% = 2.0, which is greater than 1, indicating that the demand is elastic.

If People Spend 30 Percent Less on Movie Tickets When