Suppose that 100 candy bars are demanded at a particular price.If the price of candy bars rises by 4 percent,the number of candy bars demanded falls to 92 candy bars.According to the midpoint method,what does this mean
A)The demand for candy bars in this price range is elastic.
B)The demand for candy bars in this price range is inelastic.
C)The price elasticity of demand for candy bars is 0.
D)The demand for candy bars is unit elastic.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the midpoint method as the percentage change in quantity demanded divided by the percentage change in price. Here, the percentage change in quantity demanded is -8% (from 100 to 92), and the percentage change in price is 4%. The elasticity is -8%/4% = -2, which is greater than 1 in absolute value, indicating elastic demand.

Suppose That 100 Candy Bars Are Demanded at a Particular