Suppose when the price of calculators is $18,the quantity demanded is 90,and when the price is $22,the quantity demanded drops to 70.Using the mid-point method,the price elasticity of demand is:
A) 1.25
B) 25 percent
C) 20 percent
D) 25

Question

Quizplus · Accepted Answer

Using the midpoint formula, we have:

%ΔQd = [(70-90)/((70+90)/2)] * 100% = -20/80 * 100% = -25%

%ΔP = [(22-18)/((22+18)/2)] * 100% = 4/20 * 100% = 20%

Therefore, the price elasticity of demand is:

|E| = %ΔQd / %ΔP = |-25%| / 20% = 1.25

Thus, the best choice is A) 1.25 as it is the correct numerical value of the price elasticity of demand.

Suppose When the Price of Calculators Is $18,the Quantity Demanded