At a price of $100, Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125, 9 canoes were rented.Using the midpoint formula, what is the absolute value of the price elasticity of demand for canoe rentals?

Question

Quizplus · Accepted Answer

Using the midpoint formula:
%ΔQ = (9-11)/((9+11)/2) * 100 = -16.67%
%ΔP = (125-100)/((125+100)/2) * 100 = 16.67%
|E| = %ΔQ/ %ΔP = |-16.67/16.67| = 0.9
Therefore, the absolute value of the price elasticity of demand for canoe rentals is 0.9, which corresponds to choice C.

At a Price of $100, Beachside Canoe Rentals Rented 11