Suppose when the price of movie tickets is $7.50,the quantity demanded is 550,and when the price is $8.50,the quantity demanded is 450.Using the mid-point method,the price elasticity of demand is:
A) 0.625
B) 0.625.
C) 1.6
D) 1.6.

Question

Quizplus · Accepted Answer

Using the mid-point method formula, we have:

Price elasticity of demand = [(Q2 - Q1)/((Q1 + Q2)/2)] / [(P2 - P1)/((P1 + P2)/2)]

Plugging in the values given:

Price elasticity of demand = [(450 - 550)/((450 + 550)/2)] / [($8.50 - $7.50)/(($8.50 + $7.50)/2)]

Price elasticity of demand = [-100/500] / [$1/8]

Price elasticity of demand = -0.2 / 0.125

Price elasticity of demand = -1.6

However, we usually take the absolute value of the elasticity, so the final answer is 1.6. Therefore, the best choice is C).

Suppose When the Price of Movie Tickets Is $7