Chapter 4
7. The director of a theater company in a small college town is considering changing the way he prices tickets. He has hired an economic consulting firm to estimate the demand for tickets. The firm has classified people who go to the theater into two groups and has come up with two demand functions. The demand curves for the general public (Qgp) and students (Qs) are given below:
Qgp=500 - 5P
Qs = 200 - 4P
a Graph the two demand curves on one graph, with P on the vertical axis and Q on the horizontal axis. If the current price of tickets is $35, identify the quan tity demanded by each group.
b. Find the price elasticity of demand for each group at the current price and quantity.
c. Is the director maximizing the revenue he collects from ticket sales by charging $35 for each ticket?
/ Explain.
What price should he charge each group if he wants
to maximize revenue collected from ticket sales?

... Q1 = original quantity demanded Q2 = new quantity demanded P1 = Original ... Ep=-1.00 Absolute value of elasticity is 1, arc price elasticity of demand is unit ...

... (thetimes100, 2009) We can show this in a simple formula: Price elasticity demand = percentage change in quantity demanded divided by percentage change in the ...

... It is calculated by using the formula: price elasticity of demand= percentage change in quantity demanded divided per percentage change in price. ...

... In economics, the price elasticity of demand (PED) is an elasticity that measures the responsiveness of the quantity demanded of a good to its price. ...

Calculating price and elasticity of demand. Suppose that your demand schedule for cell phone applications is as follows: Quantity Demanded per Year Quantity ...