Figure: The Demand Curve (Figure: The Demand Curve) Look again at the figure The Demand Curve.Using the midpoint method, the price elasticity of demand between $6 and $7 is approximately:
A)0.19.
B)1.
C)1.86.
D)5.4.

Question

Figure: The Demand Curve   (Figure: The Demand Curve) Look again at the figure The Demand Curve.Using the midpoint method, the price elasticity of demand between $6 and $7 is approximately:
A)0.19. 
B)1. 
C)1.86. 
D)5.4.

Quizplus · Accepted Answer

Using the midpoint method, we find that the percentage change in quantity demanded is (12-8)/(12+8)/2 = 0.25 and the percentage change in price is (7-6)/(7+6)/2 = 0.07. Therefore, the price elasticity of demand is approximately 0.25/0.07 = 1.86.

Figure: the Demand Curve (Figure: the Demand Curve)