Table 5-5
The following table shows a portion of the demand schedule for a particular good at various levels of income.

-Refer to Table 5-5.Using the midpoint method,when income equals $5,000,what is the price elasticity of demand between $8 and $12?
A) 0.56
B) 0.75
C) 1.33
D) 1.80

Question

Table 5-5
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-5.Using the midpoint method,when income equals $5,000,what is the price elasticity of demand between $8 and $12?
A) 0.56 
B) 0.75 
C) 1.33 
D) 1.80

Quizplus · Accepted Answer

The midpoint method for calculating price elasticity of demand is:(Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2)Plugging in the values from the table, we get:(100 - 120) / ((100 + 120) / 2) / (12 - 8) / ((12 + 8) / 2) = -0.56

Table 5-5 The Following Table Shows a Portion of the Demand Schedule