Question

Suppose the price for an Uber ride in Austin, TX decreases from $15 to $12 causing the quantity of rides demanded to increase from 1000 to 1600. Using the midpoint method, the price elasticity of demand for an Uber ride is ________.

Answer 1

Answer:

-2.09

Explanation:

The price elasticity of demand for the price of the Uber in the Austin texas, using the midpoint method shall be determined using the following formula

price elasticity of demand={[q2-q1/q2+q1/2]/[(p2-p1)/(p2+p1)/2]}

In the given question

q2=1600, q1=1000

p2=$12,    p1=$15

price elasticity of demand={[16001000/1600+1000/2]/[($12-$15)/($12+$15)/2]}

                                           =0.46/-0.22

                                           =-2.09