When we use the midpoint method to compute the price elasticity of demand we use
A) the original quantity and the average price.
B) the original price and the average quantity.
C) the average price and the average quantity.
D) either the original or new price, and the average quantity.
E) the average price and the original quantity.

Question

Quizplus · Accepted Answer

The midpoint method for computing the price elasticity of demand uses the average price and the average quantity to avoid the ambiguity of using either the original or new values, ensuring the elasticity is the same regardless of the direction of the change.

When We Use the Midpoint Method to Compute the Price