Question: Demand for DVD rentals at a video store is described by the equation: Q = 4,000 - 500P, where Q denotes the number of DVDs rented per week and P is the rental price in dollars.
a) Determine the point price elasticity of demand at P = $3.00.
b) What is the new point price elasticity if price is raised to P = $4.50?
c) Comment on the change in elasticity.