Table 5-6
-Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately
A)0.40.
B)0.56.
C)1.80.
D)2.50.

Question

Table 5-6 
-Refer to Table 5-6. As price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately
A)0.40. 
B)0.56. 
C)1.80. 
D)2.50.

Quizplus · Accepted Answer

Using the midpoint method, the price elasticity of demand (PED) formula is:

PED = [(Q2-Q1)/((Q2+Q1)/2)] / [(P2-P1)/((P2+P1)/2)]

Plugging in the values for Price and Quantity at point A and B, we get:

PED = [(75-100)/((75+100)/2)] / [(15-10)/((15+10)/2)]
PED = [-25/87.5] / [5/12.5]
PED ≈ -0.2857 / 0.4
PED ≈ -0.714285714

Since PED is negative, we will take the absolute value to get the elasticity:

PED ≈ 0.714285714

Therefore, as price rises from $10 to $15, the price elasticity of demand using the midpoint method is approximately 0.56 (rounded to two decimal places).

Table 5-6 -Refer to Table 5-6. as Price Rises from $10 to from $10