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 $6 to $8, the price elasticity of demand equals ________ and demand is ________.
A) -0.57; inelastic
B) -1.75; elastic
C) -1.9; inelastic
D) -2.0; elastic

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 $6 to $8, the price elasticity of demand equals ________ and demand is ________.
A) -0.57; inelastic 
B) -1.75; elastic 
C) -1.9; inelastic 
D) -2.0; elastic

Quizplus · Accepted Answer

The midpoint formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Assuming the quantity demanded decreases significantly with the price increase, the calculation results in an elasticity of -1.75, indicating elastic demand.

Refer to the Information Provided in Figure 5