If 12 candy bars are demanded at $.30 each and 4 candy bars are demanded at $.50 each,what is the price elasticity of demand using the midpoint formula?
A)2
B).5
C)7.5
D).4
E)1.67

Question

Quizplus · Accepted Answer

The midpoint formula for price elasticity of demand is:Ed = (% Change in Quantity Demanded) / (% Change in Price)In this case, the initial quantity demanded is 12 candy bars at $0.30 each, and the final quantity demanded is 4 candy bars at $0.50 each.The percentage change in quantity demanded is:(4 - 12) / 12 = -0.67The percentage change in price is:(0.50 - 0.30) / 0.30 = 0.67Therefore, the price elasticity of demand is:Ed = -0.67 / 0.67 = -1The absolute value of the price elasticity of demand is 1, which means that the demand for candy bars is elastic.

If 12 Candy Bars Are Demanded at