Question

g When the price is ​$18​, the quantity demanded is 120 units. When the price rises to ​$20​, the quantity demand falls to 100 units. The price elasticity of demand using the​ initial-value method is nothing. ​(Enter your response as an absolute value rounded to two decimal​ places.) The price elasticity of demand using the midpoint method is nothing. ​(Enter your response as an absolute value rounded to two decimal​ places.)

Answer 1

Answer:

elasticity = 1.5

elasticity = 1.727

Explanation:

given data

price p1 = ​$18

quantity demanded Q1 = 120 units

price rises p2 = ​$20

quantity demand falls Q2 = 100 units

solution

initial value method

elasticity = e = $| \frac{\Delta Q}{\Delta p} * \frac{p1}{Q1} |$    ........1

put here value

elasticity = e = $| \frac{100-120}{20-18} * \frac{18}{120} |$

elasticity = 1.5

and

price elasticity of demand midpoint method is

elasticity = e = $| \frac{\frac{\Delta Q}{\bar{Q}}}{\frac{\Delta p}{\bar{p}}} |$     .......................2

put here value

elasticity = e = $| \frac{\frac{100 - 120}{\frac{100 + 120}{2}}}{\frac{20 - 18}{\frac{18 + 20}{2} }} |$

elasticity = e = 1.727