(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $7 is approximately:

A) 0.19.
B) 1.00.
C) 1.86.
D) 5.40.

Question

(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $7 is approximately:A) 0.19.B) 1.00.C) 1.86.D) 5.40.

Hunter Dorminey · Accepted Answer

Final Answer : C, Explanation :  Using the midpoint formula, the price elasticity of demand between $6 and $7 can be calculated as:%Δ Quantity Demanded = [(150-100)/((150+100)/2)] *100% = 33.33%%Δ Price = [(7-6)/((7+6)/2)] * 100% = 8.33%Price Elasticity of Demand = %Δ Quantity Demanded / %Δ PricePrice Elasticity of Demand = 33.33% / 8.33% = 4However, the midpoint method takes the absolute value of the elasticity, so the answer is 1/4 or 0.25. Recalling that the demand curve is relatively elastic between $6 and $7, we can estimate that the elasticity is greater than 1, so the answer is closest to C) 1.86.

(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $6 and $7 is approximately:

A) 0.19.
B) 1.00.
C) 1.86.
D) 5.40.

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