Table 5-2

-Refer to Table 5-2.Using the midpoint method,if the price falls from $60 to $40,the absolute value of the price elasticity of demand is
A) 0.4.
B) 1.
C) 4.
D) 20.

Question

Table 5-2
 
-Refer to Table 5-2.Using the midpoint method,if the price falls from $60 to $40,the absolute value of the price elasticity of demand is
A) 0.4. 
B) 1. 
C) 4. 
D) 20.

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)]. If the price falls from $60 to $40, the elasticity is 1, indicating unitary elasticity.

Table 5-2 -Refer to Table 5-2.Using the Midpoint Method,if the Price Falls