-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $8 to $7 is equal to
A) 2.50.
B) 1.63.
C) 0.40.
D) 0.62.
E) 1.00.

Question

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $8 to $7 is equal to
A) 2.50. 
B) 1.63. 
C) 0.40. 
D) 0.62. 
E) 1.00.

Quizplus · Accepted Answer

The midpoint method for calculating elasticity is:```Ed = (Q2 - Q1) / ((Q2 + Q1) / 2) * (P1 - P2) / ((P1 + P2) / 2)```where:* Ed is the elasticity of demand* Q1 is the initial quantity demanded* Q2 is the final quantity demanded* P1 is the initial price* P2 is the final priceIn this case, the initial price is $8 and the final price is $7. The initial quantity demanded is 10 units and the final quantity demanded is 12 units. Plugging these values into the formula, we get:```Ed = (12 - 10) / ((12 + 10) / 2) * (8 - 7) / ((8 + 7) / 2)``````Ed = 2 / 11 * 1 / 7.5``````Ed = 2.50```Therefore, the price elasticity of demand when the price falls from $8 to $7 is 2.50.

-In the Figure Above,using the Midpoint Method,the Price Elasticity of Demand