Question

Using the midpoint method, calculate the price elasticity of demand for Good Z using the following information:
a) When the price of good Z is $10, the quantity demanded of good Z is 85 units.
b) When the price of good Z rises to $15, the quantity demanded of good Z falls to 60 units.

Answer 1

Answer:elasticity using mid point formular : Q2 - Q1/(Q2+Q1) /2 X 100

P2-P1/ (P2+P1) /2 x100

60- 85 ÷(60+85) ÷ 2 x100 = -20.69

15-10 ÷ (15+10)÷ 2 x 100 = 40

Elasticity = -20.69/ 40

= -0.52

Explanation: