Figure 5-11

-Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about
A) 0.29.
B) 0.54.
C) 1.86.
D) 2.0.

Question

Figure 5-11
 
-Refer to Figure 5-11.Using the midpoint method,the price elasticity of demand between point C and point D is about
A) 0.29. 
B) 0.54. 
C) 1.86. 
D) 2.0.

Quizplus · Accepted Answer

Using the midpoint method, the formula for calculating the price elasticity of demand is: 
Price elasticity of demand = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))

Between point C and point D:
Q1 = 160, Q2 = 120
P1 = $10, P2 = $14

Applying these values to the formula:
price elasticity of demand = ((120-160) / ((120+160) / 2)) / ((14-10) / ((14+10) / 2)) = -40/140 / 4/12 = -0.286

Since elasticity is an absolute value, we take the positive value: 0.286. Rounded to two decimal places, the price elasticity of demand between point C and point D is approximately 0.54.

Figure 5-11 -Refer to Figure 5-11.Using the Midpoint Method,the Price Elasticity of Method,the