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. Using the midpoint formula, if the price of a gardenburger decreases from $7 to $6, the price elasticity of demand equals ________, and the decrease results in a(n) ________ in total revenue.
A) -.13; decrease
B) -.69; increase
C) -1.44; increase
D) -13; increase

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. Using the midpoint formula, if the price of a gardenburger decreases from $7 to $6, the price elasticity of demand equals ________, and the decrease results in a(n) ________ in total revenue.
A) -.13; decrease 
B) -.69; increase 
C) -1.44; increase 
D) -13; increase

Quizplus · Accepted Answer

The midpoint formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. If the price decreases from $7 to $6, the elasticity is -1.44, indicating demand is elastic, leading to an increase in total revenue.

Refer to the Information Provided in Figure 5