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Classification of Demand by Price Elasticity
Demand is classified based on its price elasticity value. If the elasticity is greater than 1, demand is considered 'elastic,' meaning a 1% price increase causes a quantity decrease of more than 1%. Conversely, if the elasticity is less than 1, demand is classified as 'inelastic,' indicating that quantity sold is less responsive to price changes.
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A local cinema increases the price of its movie tickets by 10%. After the price change, the management observes that the number of tickets sold per week decreases by 15%. Based on this information, how would you classify the demand for these movie tickets?
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