Nef

price elasticity of demand

Responsiveness of the quantity demanded to changes in the price of the product, holding constant the values of all other variables in the demand function

Thus, a 1 percent change in the level of advertising expenditures in the range of $20,000 to $50,000 results, on average, in a 1.4 percent change in movie ticket demand.

To summarize, it is important to remember that point elasticity is a marginal concept. It measures the elasticity at a specific point on a function. Proper use of point elasticity is limited to analysis of very small changes, say 0 percent to 5 percent, in the relevant independent variable. Arc elasticity is a better concept for measuring the average elasticity over an extended range when the change in a relevant independent variable is 5 percent or more. It is the appropriate tool for incremental analysis.

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