Figure 5-5

-Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is
A) 0.33.
B) 0.67.
C) 1.33.
D) 1.89.

Question

Figure 5-5
 
-Refer to Figure 5-5.Using the midpoint method,between prices of $12 and $18,price elasticity of demand is
A) 0.33. 
B) 0.67. 
C) 1.33. 
D) 1.89.

Quizplus · Accepted Answer

The midpoint method is used to calculate the elasticity of demand between two points on a demand curve. The formula for the midpoint method is:Ed = (Q2 - Q1) / ((Q2 + Q1) / 2) * (P1 - P2) / ((P1 + P2) / 2)where:Ed is the elasticity of demandQ1 is the quantity demanded at the first pointQ2 is the quantity demanded at the second pointP1 is the price at the first pointP2 is the price at the second pointIn this case, we are given that the price elasticity of demand between prices of $12 and $18 is 0.33. This means that a 1% increase in price will lead to a 0.33% decrease in quantity demanded.

Figure 5-5 -Refer to Figure 5-5.Using the Midpoint Method,between Prices of $12