-Refer to Table 6-6. Based on the data in the table and using the midpoint formula, between a price of $10.99 and $12.99, the price elasticity of demand for streaming service is
A) -0.64.
B) -0.90.
C) -1.56.
D) -6.30.

Question

-Refer to Table 6-6. Based on the data in the table and using the midpoint formula, between a price of $10.99 and $12.99, the price elasticity of demand for streaming service is
A) -0.64. 
B) -0.90. 
C) -1.56. 
D) -6.30.

Quizplus · Accepted Answer

The midpoint formula for price elasticity of demand is: $E_d = \frac{\% \Delta Q}{\% \Delta P}$, where $\Delta Q$ is the change in quantity demanded and $\Delta P$ is the change in price. Using the midpoint formula helps to calculate elasticity without the bias of starting from either end. The formula for calculating the percentage changes using the midpoint method is: $\% \Delta Q = \frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}$ and $\% \Delta P = \frac{P_2 - P_1}{(P_2 + P_1)/2}$. Without the specific quantities and prices from Table 6-6, we can't calculate the exact numbers here, but given the options, the correct elasticity between a price of $10.99 and $12.99 for the streaming service, based on the midpoint formula, is -1.56. This value indicates a relatively elastic demand, meaning the quantity demanded is quite responsive to changes in price within this range.