-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals
A) 0.13.
B) 0.33.
C) 1.44.
D) 13.0.

Question

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals
A) 0.13. 
B) 0.33. 
C) 1.44. 
D) 13.0.

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), the change in quantity and price can be plugged into this formula to calculate the price elasticity of demand. The correct calculation results in an elasticity of 1.44, indicating a relatively elastic demand.