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Suppose at $10 the quantity demanded is 100. When the price falls to $8, the quantity demanded increases to 130. The price elasticity of demand (using the midpoint formula) between $10 and $8 is approximately:

Respuesta :

Answer:

-$1.17

Explanation:

The computation of the price elasticity of demand using mid point formula is presented below:

= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of quantity demanded)  

where,  

Change in quantity demanded is

= Q2 - Q1

= 130 - 100

= 30

And, an average of quantity demanded is

= (130+ 100) ÷ 2

= 115

Change in price is

= P2 - P1

= $8 - $10

= -$2

And, the average of price is

= ($8+ $10) ÷ 2

= 9

So, after solving this, the price is -$1.17

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