-Refer to Table 5-2. Using the midpoint method, if the price falls from $150 to $100, the absolute value of the price elasticity of demand is
A)0.4.
B)0.9.
C)1.1.
D)2.

Question

-Refer to Table 5-2. Using the midpoint method, if the price falls from $150 to $100, the absolute value of the price elasticity of demand is
A)0.4. 
B)0.9. 
C)1.1. 
D)2.

Quizplus · Accepted Answer

The midpoint method calculates elasticity using the average of the starting and ending prices and quantities. The formula is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Using this method, the elasticity is 1.1.