-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $8 to $10,the price elasticity of demand equals
A) 0.036.
B) 0.5.
C) 4.5.
D) 9.0.

Question

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $8 to $10,the price elasticity of demand equals
A) 0.036. 
B) 0.5. 
C) 4.5. 
D) 9.0.

Quizplus · Accepted Answer

The midpoint method for calculating elasticity is given by the formula: Elasticity = [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)], where Q1 and Q2 are the initial and final quantities, and P1 and P2 are the initial and final prices, respectively. Without the specific quantities (Q1 and Q2) provided in the question, we can't calculate the exact number. However, given the options and assuming the question is based on a specific figure or data set that shows a significant change in quantity demanded with the price increase, an elasticity of 4.5 (C) suggests a relatively elastic demand, which is plausible for goods like gardenburgers where consumers might be sensitive to price changes. This choice is selected based on the assumption that the correct data and calculation would lead to this result.