When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about
A) 0.55.
B) 2.
C) 1.83.
B) 10.

Question

Quizplus · Accepted Answer

The midpoint method calculates elasticity as [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Substituting the values: [(100 - 120) / (100 + 120) / 2] / [(7 - 5) / (7 + 5) / 2] = -20/110 / 2/6 = -0.1818 / 0.3333 = 0.55.

When the Price of a Good Is $5, the Quantity