Suppose that at a price of ₹300 per month, there are 30,000 subscribers to cable television in Small Town. If Small Town Cablevision raises its…
CA Foundation · Business Economics · MTP · May 2026
Suppose that at a price of ₹300 per month, there are 30,000 subscribers to cable television in Small Town. If Small Town Cablevision raises its price to ₹400 per month, the number of subscribers will fall to 20,000. Using the arc elasticity (midpoint) method for calculating the elasticity, what is the price elasticity of demand for cable TV in Small Town?
Suggested Answer and Working Notes:
Correct Answer: Option (A)
A. 1.4
Topics: Theory of Demand and Supply
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