-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $8,the price elasticity of demand equals
A) 0.024.
B) 1.75.
C) 1.9.
D) 2.0.

Question

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $8,the price elasticity of demand equals
A) 0.024. 
B) 1.75. 
C) 1.9. 
D) 2.0.

Quizplus · Accepted Answer

The midpoint method for calculating elasticity is given by the formula: [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)], where Q1 and Q2 are the initial and final quantities, and P1 and P2 are the initial and final prices. From the figure (which is not visible here, but assuming standard demand curve behavior), an increase in price from $6 to $8 would decrease the quantity demanded. Without specific quantities, we can't calculate directly, but given the options, the correct elasticity must be a reasonable estimate based on typical demand responses. 1.75 suggests a relatively elastic demand, meaning the quantity demanded is quite responsive to price changes, which aligns with typical consumer behavior for non-essential goods like gardenburgers.