Figure 5-6

-Refer to Figure 5-6.Using the midpoint method,the price elasticity of demand between point B and point C is
A) 0.5.
B) 0.75.
C) 1.0.
D) 1.3.

Question

Figure 5-6
 
-Refer to Figure 5-6.Using the midpoint method,the price elasticity of demand between point B and point C is
A) 0.5. 
B) 0.75. 
C) 1.0. 
D) 1.3.

Quizplus · Accepted Answer

The midpoint method formula for calculating price elasticity of demand is

Price elasticity of demand = (change in quantity demanded / average quantity demanded) / (change in price / average price)

Using the midpoint method between points B and C, we can calculate the change in quantity demanded and change in price:

Change in quantity demanded = 60 - 40 = 20

Average quantity demanded = (60 + 40) / 2 = 50

Change in price = $2.00 - $2.50 = -$0.50 (note that we use a negative sign to indicate a decrease in price)

Average price = ($2.00 + $2.50) / 2 = $2.25

Using these values, we can plug them into the formula:

Price elasticity of demand = (20 / 50) / (-0.50 / 2.25) = 0.75

Therefore, the price elasticity of demand between point B and point C is 0.75.

Figure 5-6 -Refer to Figure 5-6.Using the Midpoint Method,the Price Elasticity of Method,the