Figure 5-1

-Refer to Figure 5-1.What is the elasticity of demand from point B to point C,using the midpoint method
A)0.50
B)0.75
C)1.00
D)1.30

Question

Figure 5-1
 
-Refer to Figure 5-1.What is the elasticity of demand from point B to point C,using the midpoint method
A)0.50 
B)0.75 
C)1.00 
D)1.30

Quizplus · Accepted Answer

The formula for midpoint method is ((Q2-Q1)/ ((Q2+Q1)/2)) / ((P2-P1)/((P2+P1)/2)). Using the data from point B to point C, ((40-60)/((40+60)/2)) / ((4-6)/((4+6)/2)) =  (-20/50) / (-2/5) = 0.75. Therefore, the elasticity of demand from point B to point C using the midpoint method is 0.75, which falls under the category of relatively elastic demand.

Figure 5-1 -Refer to Figure 5-1.What Is the Elasticity of Demand from Elasticity