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Suppose when the price of calculators is $18, the quantity demanded is 90, and when the price is $22, the quantity demanded drops to 70. Using the mid-point method, the price elasticity of demand is:_______.

Respuesta :

jepessoa

Answer:

1.25

Explanation:

the price elasticity of demand (PED) using the midpoint formula:

PED = {(Q2 - Q1) / [(Q2 + Q1) / 2]} / {(P2 - P1) / [(P2 + P1) / 2]}

PED = {(70 - 90) / [(70 + 90) / 2]} / {(22 - 18) / [(22 + 18) / 2]} = (-20 / 80) / ( 4 / 20) = -0.25 / 0.2 = 1.25

PED = 1.25, price elastic

akposevictor

Answer:

1.25

Explanation:

To get calculate the price elasticity of demand using the mid-point method, the change in QD [ΔQ] is divided by the average of the initial and final QD [(Q2 + Q1)/2)], divided by the change in Price [ΔP]  divided by the average of the initial and final prices of calculator [(P2 + P1)/2)]

PED = { [ΔQ]/[(Q2 + Q1)/2)] } ÷ { [ΔP]/[(P2 + P1)/2)] }

Q1 = 90; Q2 = 70; P1 = 18; P2 = 22

ΔQ = 90 – 80 = 20

ΔP = 22 – 18 = 4

Therefore,

PED = (20/80) ÷ (4/20) = 0.25 ÷ 0.2  

PED = 1.25

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