Table 5-1

-Refer to Table 5-1.Using the midpoint method,demand is unit elastic when quantity demanded changes from
A) 500 to 400.
B) 400 to 300.
C) 300 to 200.
D) 200 to 100.

Question

Table 5-1
 
-Refer to Table 5-1.Using the midpoint method,demand is unit elastic when quantity demanded changes from
A) 500 to 400. 
B) 400 to 300. 
C) 300 to 200. 
D) 200 to 100.

Quizplus · Accepted Answer

Using the midpoint method, demand is unit elastic when price changes by the same percentage as quantity demanded. Therefore, we need to find the midpoint between the initial and final quantities demanded, and calculate the percentage change.

For option A, the midpoint between 500 and 400 is (500+400)/2 = 450. The percentage change is (500-400)/450 = 22.2%, which is not equal to the percentage change in price.

For option B, the midpoint between 400 and 300 is (400+300)/2 = 350. The percentage change is (400-300)/350 = 28.6%, which is equal to the percentage change in price.

For option C, the midpoint between 300 and 200 is (300+200)/2 = 250. The percentage change is (300-200)/250 = 40%, which is not equal to the percentage change in price.

For option D, the midpoint between 200 and 100 is (200+100)/2 = 150. The percentage change is (200-100)/150 = 66.7%, which is not equal to the percentage change in price.

Thus, option B is the only choice where demand is unit elastic using the midpoint method.

Table 5-1 -Refer to Table 5-1.Using the Midpoint Method,demand Is Unit Elastic