Refer to the information provided in Figure 5.3 below to answer the question(s) that follow. Figure 5.3
-Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger decreases from $9 to $8, the price elasticity of demand equals ________ and demand is ________.
A) 6.33; elastic
B) -0.16; inelastic
C) -6.33; elastic
D) -19.0; inelastic

Question

Refer to the information provided in Figure 5.3 below to answer the question(s) that follow.  Figure 5.3
-Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger decreases from $9 to $8, the price elasticity of demand equals ________ and demand is ________.
A) 6.33; elastic 
B) -0.16; inelastic 
C) -6.33; elastic 
D) -19.0; inelastic

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the midpoint formula, which is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Without the specific quantities (Q1 and Q2), we can't calculate the exact number, but the negative sign in the answer indicates a decrease in quantity demanded due to an increase in price, which is a characteristic of the law of demand. The term "elastic" suggests that the percentage change in quantity demanded is greater than the percentage change in price, which matches with a high absolute value of elasticity (greater than 1).

Refer to the Information Provided in Figure 5