Refer to the information provided in Figure 5.3 below to answer the question(s) that follow. Figure 5.3
-Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger increases from $8 to $10, the price elasticity of demand equals ________ and demand is ________.
A) 4.5; elastic
B) -0.5; inelastic
C) -4.5; elastic
D) -9.0; inelastic

Question

Refer to the information provided in Figure 5.3 below to answer the question(s) that follow.  Figure 5.3
-Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger increases from $8 to $10, the price elasticity of demand equals ________ and demand is ________.
A) 4.5; elastic 
B) -0.5; inelastic 
C) -4.5; elastic 
D) -9.0; inelastic

Quizplus · Accepted Answer

The price elasticity of demand (PED) is calculated using the midpoint formula: PED = [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Without the specific quantities (Q1 and Q2), we can't calculate the exact number, but the negative sign in the answer indicates a normal inverse relationship between price and quantity demanded, which is typical for PED. The term "elastic" means that the quantity demanded changes by a greater percentage than the price change, which is consistent with a PED magnitude greater than 1 (ignoring the sign).

Refer to the Information Provided in Figure 5