The owner of a movie theater found that when he raised ticket prices 10%, he sold 20% more tickets. What is the price elasticity of demand?
A) 0.5
B) 2.0
C) 10
D) 20

Question

Quizplus · Accepted Answer

The price elasticity of demand can be calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the percentage change in price is 10% and the percentage change in quantity demanded is 20%. Therefore, the price elasticity of demand is 20%/10% = 2.0, indicating that the demand for movie tickets is relatively elastic (changes in price have a relatively large effect on quantity demanded).

The Owner of a Movie Theater Found That When He