Figure 5-5

-Refer to Figure 5-5.Using the midpoint method,demand is unit elastic between prices of
A) $18 and $24.
B) $24 and $30.
C) $24 and $36.
D) $30 and $36.

Question

Figure 5-5
 
-Refer to Figure 5-5.Using the midpoint method,demand is unit elastic between prices of
A) $18 and $24. 
B) $24 and $30. 
C) $24 and $36. 
D) $30 and $36.

Quizplus · Accepted Answer

The midpoint method calculates the price elasticity of demand by dividing the percentage change in quantity by the percentage change in price, and then multiplying by the midpoints of the initial and final prices and quantities. 
Using this method, we can find the midpoint of the initial price of $24 and the final price of $36: 
Midpoint of prices = ($24 + $36)/2 = $30 
Midpoint of quantities = (500 - 250)/2 = 125 
Using the midpoint formula, we can calculate the price elasticity of demand between the initial and final prices: 
Elasticity = [(125/375) / (12.5/30)] x 100 = 1 
Since the resulting elasticity is equal to 1, this indicates unit elasticity. Therefore, demand is unit elastic between prices of $24 and $36.

Figure 5-5 -Refer to Figure 5-5.Using the Midpoint Method,demand Is Unit Elastic