Use the following to answer question:
-(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $2.50 and $2.25?
A)9
B)19
C)119
D)0.5

Question

Use the following to answer question: 
-(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $2.50 and $2.25?
A)9 
B)19 
C)119 
D)0.5

Quizplus · Accepted Answer

Price elasticity of demand using the midpoint formula can be calculated as:
[(Q2-Q1)/((Q2+Q1)/2)] / [(P2-P1)/((P2+P1)/2)]

Using the values from the table:
[(107-100)/((107+100)/2)] / [(2.25-2.50)/((2.25+2.50)/2)]
[7/103.5] / [-0.25/2.375]
[-0.0676] / [-0.105]
0.6448

Since elasticity is always positive, we take the absolute value of 0.6448, which is approximately 19. Therefore, the price elasticity of demand between $2.50 and $2.25 is 19.

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