Table 5-4
The following table shows the demand schedule for a particular good.
-Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is
A) 0.43
B) 0.67
C) 1
D) 2.33

Question

Table 5-4
The following table shows the demand schedule for a particular good. 
-Refer to Table 5-4. Using the midpoint method, when price falls from $8 to $4, the price elasticity of demand is
A) 0.43 
B) 0.67 
C) 1 
D) 2.33

Quizplus · Accepted Answer

The midpoint method for calculating price elasticity of demand is:(Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2)Plugging in the values from the table, we get:(10 - 15) / ((10 + 15) / 2) / (8 - 4) / ((8 + 4) / 2) = -0.43Therefore, the price elasticity of demand is -0.43, which is closest to choice A.

Table 5-4 The Following Table Shows the Demand Schedule for a Particular