If we ignore the negative or positive sign,the midpoint method of calculating a percentage change in price between two points on a demand curve results in
A) a smaller percentage change if the price rises than if it falls.
B) the same percentage, regardless of whether the price increases or decreases.
C) the price elasticity of demand.
D) the price elasticity of supply.
E) a higher percentage change if the price rises than if it falls.

Question

Quizplus · Accepted Answer

The midpoint method of calculating a percentage change in price between two points on a demand curve does not depend on the direction of the change in price. It always results in the same percentage change, regardless of whether the price increases or decreases. This method is preferred over the simple percentage change method as it avoids biased measurement of percentage changes due to different starting and ending points. The midpoint method calculates the percentage change as (Q2 - Q1) / [(Q2 + Q1)/2] * 100.

If We Ignore the Negative or Positive Sign,the Midpoint Method