Suppose the price of product X is reduced from $16.00 to $12.00 and, as a result, the quantity of X demanded increases from 300 to 450. Using the midpoint method, the price elasticity of demand for X in the given price range is:Group of answer choices1.401.000.400.29
Question
Suppose the price of product X is reduced from 12.00 and, as a result, the quantity of X demanded increases from 300 to 450. Using the midpoint method, the price elasticity of demand for X in the given price range is:Group of answer choices1.401.000.400.29
Solution
To calculate the price elasticity of demand using the midpoint method, we need to follow these steps:
- Calculate the percentage change in quantity demanded.
- Calculate the percentage change in price.
- Divide the percentage change in quantity demanded by the percentage change in price.
Let's do the calculations:
-
The percentage change in quantity demanded: (New Quantity - Old Quantity) / Midpoint Quantity * 100 (450 - 300) / ((450 + 300) / 2) * 100 = 33.33%
-
The percentage change in price: (New Price - Old Price) / Midpoint Price * 100 (12 - 16) / ((12 + 16) / 2) * 100 = -28.57%
-
The price elasticity of demand: % Change in Quantity / % Change in Price 33.33 / -28.57 = -1.17
The price elasticity of demand for X in the given price range is -1.17. This value is not in the provided answer choices. Please check the question or the answer choices.
Similar Questions
Suppose the price of local cable TV service increased from $35.00 to $38.00 and as a result the number of cable subscribers decreased from 300,000 to 280,000. Along this portion of the demand curve, using the midpoint method, price elasticity of demand is approximatelyMultiple Choice−1.11.−0.84.−0.61.−1.17.
Suppose a seller produces Good B. For each question, select the correct answer from the dropdown box.(a) Suppose that when the price of Good B increases from $55 to $70, its quantity supplied increases from 56 units to 62 units. Using the midpoint formula, the price elasticity of supply is
Use the data in the table below to answer the following question. Price Quantity Demanded$20 1218 1716 2014 2412 3010 368 406 444 48 The price elasticity of demand (based on the midpoint formula) when price increases from $10 to $12 isMultiple Choice-3.29.-1.37.-1.-0.33.
The quantity demanded increases from 20 to 30 units as the price falls from 50 to 40. What is the price elasticity of demand using the arc (or midpoint) method? Group of answer choices- 1/5- 9- 1/2- 9/5None of the above
Say your friend Nick sells skateboards. He sells 30 a week at $150. He then raises his price to $175 and sells 25. Use the midpoint formula to determine a fractional numerical value for the price elasticity of demand.A.24/26B.4/24C.4/143D.22/26E.13/11
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.