The demand for tickets to a rock concert is given by D(p) = 200,000 - 10,000p, where p is the price of tickets. If the price of tickets is $17, then the price elasticity of demand for tickets is

Question

Quizplus · Accepted Answer

The formula for price elasticity of demand is:

E = (% change in quantity demanded) / (% change in price)

We can find the initial quantity demanded at a price of $17:

D(17) = 200,000 - 10,000(17) = 30,000

Let's say the price increases to $18:

D(18) = 200,000 - 10,000(18) = 20,000

Using these values, we can calculate the percentage change in quantity demanded and the percentage change in price:

% change in quantity demanded = [(20,000 - 30,000) / 30,000] x 100% = -33.33%

% change in price = [(18 - 17) / 17] x 100% = 5.88%

Plugging these values into the formula, we get:

E = (-33.33% / 5.88%) = -5.67

Therefore, the price elasticity of demand for tickets is -5.67. Choice E is the correct answer.

The Demand for Tickets to a Rock Concert Is Given