1 movie tickets prices increased by 5 and resulted in a 8

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1. Movie tickets prices increased by 5% and resulted in a 8% drop in sales. What is the price elasticity of demand?

2. If ticket prices decreased by 5% instead of raising them, what would the changes in attendance would you expect?

3. If a competing cinema reduced its prices by 10%, how would that affect demand at your cinema?

Using the formula E=%Chg in Q / %Chg in P

I think the first answer is E= -8/5 = -1.6 and the second answer is -1.6=Chg in Q / -5 which makes Q=8. Please correct me if I am wrong. The 3rd question has me stuck, do I base the demand at my cinema off the -1.6?

Reference no: EM13378608

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