-Using the data in the table above,when the price of a skirt rises from $20 to $35,what is the price elasticity of demand? (Use the midpoint method.)
A) 0.33
B) 0.25
C) 1.00
D) 1.33
E) 3.00

Question

-Using the data in the table above,when the price of a skirt rises from $20 to $35,what is the price elasticity of demand? (Use the midpoint method.)
A) 0.33 
B) 0.25 
C) 1.00 
D) 1.33 
E) 3.00

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Using the midpoint method, the percentage change in quantity demanded is (100 - 80) / ((100 + 80) / 2) = 20 / 90 = 0.222. The percentage change in price is (35 - 20) / ((35 + 20) / 2) = 15 / 27.5 = 0.545. Therefore, the price elasticity of demand is 0.222 / 0.545 = 0.407, which is closest to choice A, 0.33.

-Using the Data in the Table Above,when the Price of a Skirt