Price Elasticity of Demand Calculation: Movie Theater Ticket Pricing
Why should the movie theater charge the general public $15.00 per ticket, given the elasticity of demand for students and the general public?
Elasticity of demand measures how responsive the quantity demanded is to a change in price. A higher absolute value of elasticity indicates a greater responsiveness to price changes. To determine the price the movie theater should charge the general public, we can use the concept of price elasticity of demand formula: Price elasticity of demand = (Percentage change in quantity demanded) / (Percentage change in price). Since the elasticity of demand for students is -3 and for the general public it's -2, it means that students are more responsive to price changes. By using the student's elasticity of demand and the price charged to students ($7.50 per ticket), we can calculate the new price for the general public. The movie theater should charge the general public $15.00 per ticket based on the elasticity of demand and price change calculation.Elasticity of Demand Explanation
Price Elasticity of Demand Formula
Price Calculation Process