Suppose when the price of a cookie is $2.50,the quantity demanded is 50,and when the price is $1,the quantity demanded is 200.Using the midpoint method,the price elasticity of demand is:
A) -1.40
B) -0.72
C) -140
D) -7.2

Question

Quizplus · Accepted Answer

The midpoint method formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Plugging in the values: [(200 - 50) / (200 + 50) / 2] / [(1 - 2.5) / (1 + 2.5) / 2] = 150 / 125 / -1.5 / 1.75 = -1.40.

Suppose When the Price of a Cookie Is $2