The price of season tickets to a performing arts theater decreases by 3 percent.As a result,the quantity demanded increases by 6 percent.The price elasticity of demand for season tickets is:

Question

Quizplus · Accepted Answer

The formula for price elasticity of demand is (% change in quantity demanded) / (% change in price).

Given:

% change in price = -3%
% change in quantity demanded = 6%

Using the formula:
Price elasticity of demand = (6% / -3%) = -2

Since price elasticity of demand is negative, we take the absolute value and get 2. Therefore, the price elasticity of demand is 2.

The Price of Season Tickets to a Performing Arts Theater