When the price of an eBook is $15.00,the quantity demanded is 400 eBooks per day.When the price falls to $10.00,the quantity demanded increases to 700.Given this information and using the midpoint method,we know that the demand for eBooks is
A)inelastic.
B)elastic.
C)unit elastic.
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

Using the midpoint method formula ([(Q2-Q1)/((Q1+Q2)/2)] / [(P2-P1)/((P1+P2)/2)]), we get:

[(700-400)/((700+400)/2)] / [(10-15)/((10+15)/2)] = 1.14

Since the result is greater than 1, the demand for eBooks is considered elastic, meaning that a change in price has a significant impact on the quantity demanded.

When the Price of an EBook Is $15