Senior citizens of a city face a demand curve for movies with a constant price elasticity equal...

Question

Senior citizens of a city face a demand curve for movies with a constant price elasticity equal to-3.5.

Robert · Accepted Answer

Price elasticity: Solution 
▼ Relationship between marginal revenue and the price elasticity of demand: 
MR = P [1+1/n] 
Since MR = MC 
MC = P / (1+1/n) 
● P = MC* [n/(n+1)] 
Price elasticity of demand of senior citizens = -4.5 
P = $2.5 x [-3.5/(-3.5+1)] 
P = $2.5 x (-3.5/-2.5) or 2.5 x 1.

Senior citizens of a city face a demand curve for movies with a constant price elasticity equal to-3.5.

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment