Assume that Dr. X charges $30 for a test and that last week he performed 120 tests. This week, he raised his charges to $32.50 for that test and only provided 110 tests. What is the approximate arc price elasticity of demand?

Question

Quizplus · Accepted Answer

The arc price elasticity of demand is calculated using the formula: [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Substituting the given values: [(110 - 120) / ((110 + 120) / 2)] / [(32.50 - 30) / ((32.50 + 30) / 2)] = -1.1.

Assume That Dr