Suppose that 50 candy bars are demanded at a particular price.If the price of candy bars rises from that price by 5 percent,the number of candy bars demanded falls to 48.Using the midpoint approach to calculate the price elasticity of demand,it follows that the
A)demand for candy bars in this price range is elastic.
B)price increase will decrease the total revenue of candy bar sellers.
C)price elasticity of demand for candy bars in this price range is about 1.22.
D)price elasticity of demand for candy bars in this price range is about 0.82.

Question

Quizplus · Accepted Answer

The midpoint formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Here, Q1 = 50, Q2 = 48, and the price change is 5%. The calculation gives an elasticity of approximately 0.82, indicating inelastic demand.

Suppose That 50 Candy Bars Are Demanded at a Particular