Figure 7-4
-Refer to Figure 7-4.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.
A)0.32
B)0.4
C)2.5
D)3.125

Question

Figure 7-4 
-Refer to Figure 7-4.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.
A)0.32 
B)0.4 
C)2.5 
D)3.125

Quizplus · Accepted Answer

The absolute value of the price elasticity of demand between e and f is 3.125. This is calculated using the midpoint formula:```|ΔQ/Q| / |ΔP/P| = |(Qf - Qe) / ((Qf + Qe) / 2)| / |(Pf - Pe) / ((Pf + Pe) / 2)|```where:* ΔQ is the change in quantity demanded* Q is the average quantity demanded* ΔP is the change in price* P is the average pricePlugging in the values from the graph, we get:```|ΔQ/Q| / |ΔP/P| = |(10 - 15) / ((10 + 15) / 2)| / |(2 - 1) / ((2 + 1) / 2)|``````|ΔQ/Q| / |ΔP/P| = |(-5) / (12.5)| / |(1) / (1.5)|``````|ΔQ/Q| / |ΔP/P| = 0.4 / 0.6667``````|ΔQ/Q| / |ΔP/P| = 3.125```

Figure 7-4 -Refer to Figure 7-4.Using the Midpoint Formula,calculate the Absolute Value