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 $1.00 and $0.75?
A)0.54
B)0.66
C)0.75
D)1.00

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 $1.00 and $0.75?
A)0.54 
B)0.66 
C)0.75 
D)1.00

Quizplus · Accepted Answer

The price elasticity of demand between $1.00 and $0.75 is calculated as follows:% Change in Quantity Demanded = (100 - 75) / 75 = 0.33% Change in Price = (1.00 - 0.75) / 0.875 = 0.29Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price = 0.33 / 0.29 = 1.14Using the midpoint formula, the price elasticity of demand is calculated as follows:Price Elasticity of Demand = (1.14 + 1.00) / 2 = 1.07Therefore, the price elasticity of demand between $1.00 and $0.75 is 1.07, which is closest to choice A) 0.54.

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