Suppose at a price of $10 the quantity demanded is 100.When the price falls to $8, the quantity demanded increases to 130.The price elasticity of demand between the prices of $10 and $8, using the midpoint method, is approximately:
A)1.17.
B)1.50.
C)0.85.
D)1.00.

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: [(130 - 100) / (130 + 100) / 2] / [(8 - 10) / (8 + 10) / 2] = 30/115 / -2/9 = 1.17.

Suppose at a Price of $10 the Quantity Demanded Is