-Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is
A)zero.
B)unit elastic.
C)inelastic.
D)elastic.

Question

-Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is
A)zero. 
B)unit elastic. 
C)inelastic. 
D)elastic.

Quizplus · Accepted Answer

The midpoint method calculates elasticity as the percentage change in quantity demanded divided by the percentage change in price. If the price falls from $200 to $150, the percentage change in price is significant, and if the quantity demanded changes proportionally more, the demand is elastic.