In Problem 9, the demand for tickets is given by D(p) = 200,000 - 10,000p, where p is the price of tickets. If the price of tickets is $8, 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 are given that the price of tickets is $8. If we increase the price by $1, to $9, the new demand becomes:

D(9) = 200,000 - 10,000(9) = 110,000

The change in quantity demanded is:

% change in quantity demanded = (110,000 - 125,000)/125,000 = -0.12

The % change in price is:

% change in price = (9-8)/8 = 0.125

Plugging in these values, we get:

E = (-0.12) / (0.125) = -0.96

Rounding to two decimal places, the price elasticity of demand is approximately -0.67, which corresponds to choice (E).

In Problem 9, the Demand for Tickets Is Given by D(p)