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Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies?
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Suppose the price of movies seen at a theatre rises from rs120 per per...
**Price Elasticity of Demand for Movies**
To calculate the price elasticity of demand for movies, we need to determine the percentage change in quantity demanded and the percentage change in price.
**Percentage Change in Quantity Demanded:**
The initial quantity demanded is 300 persons, and the new quantity demanded is 200 persons.
The percentage change in quantity demanded can be calculated using the following formula:
Percentage Change in Quantity Demanded = ((New Quantity Demanded - Initial Quantity Demanded) / Initial Quantity Demanded) * 100
Using the given values:
Percentage Change in Quantity Demanded = ((200 - 300) / 300) * 100 = (-100 / 300) * 100 = -33.33%
**Percentage Change in Price:**
The initial price of movies is ₹120 per person, and the new price is ₹200 per person.
The percentage change in price can be calculated using the following formula:
Percentage Change in Price = ((New Price - Initial Price) / Initial Price) * 100
Using the given values:
Percentage Change in Price = ((₹200 - ₹120) / ₹120) * 100 = (₹80 / ₹120) * 100 = 66.67%
**Price Elasticity of Demand:**
The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Price Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price
Using the calculated values:
Price Elasticity of Demand = (-33.33% / 66.67%) = -0.5
**Interpretation:**
The price elasticity of demand is -0.5. This indicates that the demand for movies is inelastic. Inelastic demand means that a change in price has a proportionately smaller change in quantity demanded.
In this case, the increase in price from ₹120 to ₹200 caused a decrease in quantity demanded from 300 to 200. However, the percentage change in quantity demanded (-33.33%) is less than the percentage change in price (66.67%). This suggests that the demand for movies is not very responsive to price changes.
Therefore, the price elasticity of demand for movies is relatively low, indicating inelastic demand.
To calculate the price elasticity of demand for movies, we need to determine the percentage change in quantity demanded and the percentage change in price.
**Percentage Change in Quantity Demanded:**
The initial quantity demanded is 300 persons, and the new quantity demanded is 200 persons.
The percentage change in quantity demanded can be calculated using the following formula:
Percentage Change in Quantity Demanded = ((New Quantity Demanded - Initial Quantity Demanded) / Initial Quantity Demanded) * 100
Using the given values:
Percentage Change in Quantity Demanded = ((200 - 300) / 300) * 100 = (-100 / 300) * 100 = -33.33%
**Percentage Change in Price:**
The initial price of movies is ₹120 per person, and the new price is ₹200 per person.
The percentage change in price can be calculated using the following formula:
Percentage Change in Price = ((New Price - Initial Price) / Initial Price) * 100
Using the given values:
Percentage Change in Price = ((₹200 - ₹120) / ₹120) * 100 = (₹80 / ₹120) * 100 = 66.67%
**Price Elasticity of Demand:**
The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
Price Elasticity of Demand = Percentage Change in Quantity Demanded / Percentage Change in Price
Using the calculated values:
Price Elasticity of Demand = (-33.33% / 66.67%) = -0.5
**Interpretation:**
The price elasticity of demand is -0.5. This indicates that the demand for movies is inelastic. Inelastic demand means that a change in price has a proportionately smaller change in quantity demanded.
In this case, the increase in price from ₹120 to ₹200 caused a decrease in quantity demanded from 300 to 200. However, the percentage change in quantity demanded (-33.33%) is less than the percentage change in price (66.67%). This suggests that the demand for movies is not very responsive to price changes.
Therefore, the price elasticity of demand for movies is relatively low, indicating inelastic demand.
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Suppose the price of movies seen at a theatre rises from rs120 per per...
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Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies?
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Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies?.
Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Suppose the price of movies seen at a theatre rises from rs120 per person to ₹200 per person. The theatre manager observes that the rise in price causes attendance at a given movie to fall from 300 to 200 persons. What is the price elasticity of demand for movies?.
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