Use the following to answer question:
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:
A)0.19.
B)0.54.
C)1.00
D)1.86.

Question

Use the following to answer question: 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:
A)0.19. 
B)0.54. 
C)1.00 
D)1.86.

Quizplus · Accepted Answer

To use the midpoint formula, you need to calculate the percentage change in quantity and price first. 
Percentage change in quantity = [(10-20)/(10+20)/2] * 100% = -33.33%
Percentage change in price = [(4-3)/(4+3)/2] * 100% = 14.29%
Then the price elasticity of demand is:
|-33.33%/14.29%| = 0.54, which is approximately B.

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