Table 7-12
$\begin{array}{|r|c|c|}
\hline \text { Price of Book } & \begin{array}{c}
\text { Copies Sold at } \
\text { That Price }
\end{array} & \begin{array}{c}
\text { Total Revenue at } \
\text { That Price }
\end{array} \
\hline \$ 14.99 & 100,000 & \$ 1,499,000 \
\hline 9.99 & 174,000 & 1,738,00 \
\hline
\end{array}$
-Refer to Table 7-12.Based on the data in the table and using the midpoint formula,between a price of $9.99 and $14.99,the price elasticity of demand for books is
A) -0.74.
B) -1.16.
C) -1.35.
D) -14.8.

Question

Table 7-12
 $\begin{array}{|r|c|c|}
\hline \text { Price of Book } & \begin{array}{c}
\text { Copies Sold at } \
\text { That Price }
\end{array} & \begin{array}{c}
\text { Total Revenue at } \
\text { That Price }
\end{array} \
\hline \$ 14.99 & 100,000 & \$ 1,499,000 \
\hline 9.99 & 174,000 & 1,738,00 \
\hline
\end{array}$
-Refer to Table 7-12.Based on the data in the table and using the midpoint formula,between a price of $9.99 and $14.99,the price elasticity of demand for books is
A) -0.74.
B) -1.16.
C) -1.35.
D) -14.8.

Quizplus · Accepted Answer

Using the midpoint formula:

Price elasticity of demand = [(quantity change ÷ midpoint quantity) ÷ (price change ÷ midpoint price)]

Price change = $14.99 - $9.99 = $5
Midpoint price = ($14.99 + $9.99) ÷ 2 = $12.49

Quantity change = 100,000 - 174,000 = -74,000
Midpoint quantity = (100,000 + 174,000) ÷ 2 = 137,000

Price elasticity of demand = [(-74,000 ÷ 137,000) ÷ ($5 ÷ $12.49)] = -1.35

Therefore, the price elasticity of demand for books between a price of $9.99 and $14.99 is -1.35, which indicates a relatively elastic demand. The best choice is (C).

Table 7-12 -Refer to Table 7-12