Figure 7-5

-Refer to Figure 7-5.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.
A)0.32
B)0.4
C)2.5
D)3.125

Question

Figure 7-5
 
-Refer to Figure 7-5.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.
A)0.32 
B)0.4 
C)2.5 
D)3.125

Quizplus · Accepted Answer

Using the midpoint formula:
Price elasticity of demand = absolute value of [(change in quantity demanded / average quantity demanded) / (change in price / average price)]
= |[(200-120) / ((200+120)/2)] / [(8-10) / ((8+10)/2)]|
= |[-80/160] / [-2/9]|
= |0.5 / -0.222222|
= 2.25
Taking absolute value, we get 3.125 as the answer.

Figure 7-5 -Refer to Figure 7-5.Using the Midpoint Formula,calculate the Absolute Value