When the price of a good is $5,the quantity demanded is 120 units per month; when the price is $7,the quantity demanded is 100 units per month.Using the midpoint method,the price elasticity of demand is about
A) 0.55.
B) 1.83.
C)10.
D)2.

Question

Quizplus · Accepted Answer

The midpoint method formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Plugging in the values: [(100 - 120) / (110)] / [(7 - 5) / (6)] = (-20 / 110) / (2 / 6) = -0.1818 / 0.3333 ≈ 0.55.

When the Price of a Good Is $5,the Quantity Demanded