Suppose that at a price of $500 the weekly round-trip ticket sales for a flight from...
Suppose that at a price of $500 the weekly round-trip ticket sales for a flight from New York to San Francisco are 10,000 tickets, and at a price of $1,000 the ticket sales are 9,000 tickets. Calculate the price elasticity of demand over this price range and determine if demand is elastic, inelastic, or unit elastic.
Homework Answers
price elasticity of demand = (dQ / dP) * (P / Q)
dQ = 9000 - 10000 = -1000
dP = 1000 - 500 = 500
So, (-1000 / 500 ) * (500 / 10000) = -2 (500 / 10000) = - 2 * (1 / 20) = - (1/10)
So demand is inelastic.
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