Suppose that 300 bottles of soda are demanded at a particular price.If the price of a bottle of soda rises from that price by 6 percent,the number of bottles of soda demanded falls to 275.Using the midpoint approach to calculate the price elasticity of demand,it follows that the
A)demand for bottles of soda in this price range is perfectly elastic.
B)price increase will increase the total revenue of soda sellers.
C)price elasticity of demand for bottles of soda in this price range is about 0.69.
D)price elasticity of demand for bottles of soda in this price range is about 1.45.

Question

Quizplus · Accepted Answer

Using the midpoint approach formula, the price elasticity of demand can be calculated as:
[(275-300)/((275+300)/2)] / [(0.06/((275+300)/2))] = -1.45
Since the elasticity is greater than 1, the demand for bottles of soda in this price range is considered elastic. Therefore, if the price increases, the total revenue of soda sellers will decrease.

Suppose That 300 Bottles of Soda Are Demanded at a Particular