Refer to the information provided in Figure 5.3 below to answer the questions that follow. Figure 5.3
-Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger is increased from $6 to $8, the price elasticity of demand equals ________ and demand is ________.
A) -0.57; inelastic
B) -1.75; elastic
C) -1.9; inelastic
D) -2.0; elastic

Question

Refer to the information provided in Figure 5.3 below to answer the questions that follow.  Figure 5.3
-Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger is increased from $6 to $8, the price elasticity of demand equals ________ and demand is ________.
A) -0.57; inelastic 
B) -1.75; elastic 
C) -1.9; inelastic 
D) -2.0; elastic

Quizplus · Accepted Answer

Using the midpoint formula, the price elasticity of demand can be calculated as:
(price change ÷ midpoint) ÷ (quantity change ÷ midpoint)
= [(8-6) ÷ ((8+6)/2)] ÷ [(-10 ÷ ((30+40)/2))]
= 2 ÷ -0.64
= -3.125
Since the absolute value of the elasticity is greater than 1, demand is elastic. Therefore, the correct choice is B.

Refer to the Information Provided in Figure 5