Suppose that as the price of Y falls from $9 to $8, the quantity of Y demanded increases from 1,000 to 1,250. Then the absolute value of the price elasticity (using the midpoint formula) is approximately

A) 250.
B) 2.25.
C) 1.89.
D) 0.53.

Question

Raylean Negrette · Accepted Answer

Final Answer : C, Explanation :  The price elasticity of demand using the midpoint formula is calculated as: [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Plugging in the values: [(1250 - 1000) / (1250 + 1000) / 2] / [(8 - 9) / (8 + 9) / 2] = 250/1125 / -1/8.5 = 0.2222 / -0.1176 = 1.89 (absolute value).

Suppose that as the price of Y falls from $9 to $8, the quantity of Y demanded increases from 1,000 to 1,250. Then the absolute value of the price elasticity (using the midpoint formula) is approximately

A) 250.
B) 2.25.
C) 1.89.
D) 0.53.

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Suppose that as the price of Y falls from $9 to $8, the quantity of Y demanded increases from 1,000 to 1,250. Then the absolute value of the price elasticity (using the midpoint formula) is approximatelyA) 250.B) 2.25.C) 1.89.D) 0.53.

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Learning Objectives

Learning Objectives

Related questions

Suppose that as the price of Y falls from $9 to $8, the quantity of Y demanded increases from 1,000 to 1,250. Then the absolute value of the price elasticity (using the midpoint formula) is approximately

A) 250.
B) 2.25.
C) 1.89.
D) 0.53.