A health club sells 100 memberships when the monthly price is $70 and 120 memberships when the monthly price is $60.The price elasticity of demand for memberships at this health club is (using the midpoint formula):
A)0.25.
B)0.65.
C)1.18.
D)1.
E)0.83

Question

Quizplus · Accepted Answer

The price elasticity of demand using the midpoint formula is calculated as: [(120 - 100) / ((120 + 100) / 2)] / [(60 - 70) / ((60 + 70) / 2)] = 20/110 divided by -10/65 = 1.18.

A Health Club Sells 100 Memberships When the Monthly Price