Refer to the information provided in Figure 5.2 below to answer the questions that follow. Figure 5.2
-Refer to Figure 5.2. If the price of a hamburger is increased from $6 to $8, the price elasticity of demand equals ________. Use the midpoint formula.
A) -0.24
B) -1.0
C) -1.4
D) -2.0

Question

Refer to the information provided in Figure 5.2 below to answer the questions that follow.  Figure 5.2
-Refer to Figure 5.2. If the price of a hamburger is increased from $6 to $8, the price elasticity of demand equals ________. Use the midpoint formula.
A) -0.24 
B) -1.0 
C) -1.4 
D) -2.0

Quizplus · Accepted Answer

Using the midpoint formula, we get that the percentage change in price is (8-6)/((8+6)/2) = 0.33. The percentage change in quantity demanded is (-4)/((8000+12000)/2) = -0.2. Therefore, the price elasticity of demand equals (-0.2)/(0.33) = -1.4.

Refer to the Information Provided in Figure 5