Table 5-2
$$\begin{array} { | l | l | }
\hline \text { Priea } & \text { Quintit } \
\hline \$ 100 & 0 \
\hline \$ 80 & 10 \
\hline \$ 60 & 20 \
\hline \$ 40 & 30 \
\hline \$ 20 & 40 \
\hline \$ 0 & 50 \
\hline
\end{array}$$
-Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the absolute value of the price elasticity of demand is
A) 20.
B) 10.
C) 2.33.
D) 0.43.

Question

Table 5-2
 $$\begin{array} { | l | l | } 
\hline \text { Priea } & \text { Quintit } \
\hline \$ 100 & 0 \
\hline \$ 80 & 10 \
\hline \$ 60 & 20 \
\hline \$ 40 & 30 \
\hline \$ 20 & 40 \
\hline \$ 0 & 50 \
\hline
\end{array}$$
-Refer to Table 5-2. Using the midpoint method, if the price falls from $80 to $60, the absolute value of the price elasticity of demand is
A) 20.
B) 10.
C) 2.33.
D) 0.43.

Quizplus · Accepted Answer

The midpoint method formula for calculating price elasticity of demand is:

Price elasticity of demand = ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2))

Using the values from the table, if the price falls from $80 to $60 the new values are:

P1 = $80 
P2 = $60 
Q1 = 10 
Q2 = 20

Plugging these values into the formula:

Price elasticity of demand = ((20-10) / ((10+20) / 2)) / (($60-$80) / (($60+$80) / 2))

Price elasticity of demand = (10 / 15) / (-20 / 70)

Price elasticity of demand = 2.33

Therefore, the answer is C) 2.33.

Table 5-2 -Refer to Table 5-2