-In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $7 to $6 is equal to
A) 0.40.
B) 2.50.
C) 0.62.
D) 1.00.
E) 1.63.

Question

-In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $7 to $6 is equal to
A) 0.40. 
B) 2.50. 
C) 0.62. 
D) 1.00. 
E) 1.63.

Quizplus · Accepted Answer

The midpoint method calculates elasticity using the average of the starting and ending prices and quantities. The formula is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Applying this to the given prices, the elasticity is 1.63.

-In the Figure Above, Using the Midpoint Method, the Price