Suppose when the price of movie tickets is $5,the quantity demanded is 500,and when the price is $7,the quantity demanded is 300.Using the mid-point method,the price elasticity of demand is:
A)1.51.
B)0.66.
C)151 percent.
D)66 percent.

Question

Quizplus · Accepted Answer

The formula for the mid-point method of calculating price elasticity of demand is:

Price elasticity of demand = (percentage change in quantity demanded ÷ percentage change in price)

Here,
% change in quantity demanded = [(500-300) ÷ ((500+300)/2)] x 100% = 33.33%
% change in price = [(7-5) ÷ ((7+5)/2)] x 100% = 16.67%

Plug these values into the formula:

Price elasticity of demand = 33.33 ÷ 16.67 = 1.998 ≈ 1.51

Therefore, the price elasticity of demand using the mid-point method is 1.51. The correct choice is A.

Suppose When the Price of Movie Tickets Is $5,the Quantity