We use the midpoint formula in computing the price elasticity of demand coefficient in order to
A)make the coefficient value become independent of whether price goes up or down.
B)convert absolute changes into percentage changes.
C)eliminate the negative sign of the coefficient.
D)make the coefficient become equal to the slope of the demand curve.

Question

Quizplus · Accepted Answer

The midpoint formula for calculating the price elasticity of demand is used to make the elasticity coefficient independent of the direction of the price change, ensuring consistency whether prices are increasing or decreasing. This method calculates elasticity based on the average of the initial and final prices and quantities, avoiding the issue of elasticity values being dependent on whether we move from a higher to a lower price or vice versa.

We Use the Midpoint Formula in Computing the Price Elasticity