Use the following to answer question:
-(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $2.00 and $1.75?
A)2.33
B)3.00
C)4.00
D)0.125

Question

Use the following to answer question: 
-(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $2.00 and $1.75?
A)2.33 
B)3.00 
C)4.00 
D)0.125

Quizplus · Accepted Answer

The midpoint between $2.00 and $1.75 is $1.875. The quantity demanded at $2.00 is 4, and the quantity demanded at $1.75 is 6. Using the midpoint formula, the price elasticity of demand is calculated as (6-4)/[(6+4)/2]/($1.75-$2.00) = 2/-10/0.25 = 5/2 = 2.5. The closest option is B, which is 3.00.

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