Refer to Figure 5.2. If the price of a hamburger decreases from $10 to $6, the price elasticity of demand equals ________. Use the midpoint formula.

A) -0.5
B) -2.0
C) -20
D) -200

Question

Refer to Figure 5.2. If the price of a hamburger decreases from $10 to $6, the price elasticity of demand equals ________. Use the midpoint formula.A)  -0.5B)  -2.0C)  -20D)  -200

Francois Lutumika · Accepted Answer

Final Answer : B, Explanation :  The midpoint formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]. Without the specific quantities (Q1 and Q2) from Figure 5.2, we cannot calculate the exact value. However, given the options, -2.0 is a plausible value for price elasticity of demand, as it indicates a relatively elastic demand. The other options are either too extreme or not typical values for price elasticity.

Refer to Figure 5.2. If the price of a hamburger decreases from $10 to $6, the price elasticity of demand equals ________. Use the midpoint formula.

A) -0.5
B) -2.0
C) -20
D) -200

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