Answer to Question #312030 in Microeconomics for Puchu

Question

From the given Demand schedule for air tickets, calculate elasticity of demand

Price of Air Quality Ticket (Per ticket) (Tickets per month)

100000 5000

120000 3500

Answer 1

Price elasticity of demand is the percentage change in quantity divided by the percentage change in price. This formula can be used in the above scenario to get the elasticity.

(120000-100000)/(5000-3500)= 13.33. The elasticity of demand in this case is a positive number (13.33). This means that an increase in price leads to a certain proportionate decrease in quantity demanded of the air tickets.