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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