Question

Text Problem 2.10 Question Help Using the midpoint formula and the graph on the right, calculate the price elasticity of demand when the price changes from $7 to $12 and when the price changes from $12 to $18. @ @ ) When the price changes from $7 to $12, the price elasticity of demand is (Round your response to two decimal places and include a negative sign if necessary.) Price (S) Quantity Enter your answer in the answer box and then click Check Answer.

Answer 1

Answer
for 7 to 12 of price
Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)
Change in quantity=13-19=-6
average quantity=(13+19)/2=16
change in price=12-7=5
average price=(12+7)/2=9.5
Elasticity of demand=(-6/16)/(5/9.5)
=-0.7125
the elastcity of demand is -0.71

for 12 to 18 of price
Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)
Change in quantity=5-13=-8
average quantity=(5+13)/2=9
change in price=18-12=6
average price=(18+12)/2=15
Elasticity of demand=(-8/9)/(6/15)
=-2.22222222
=-2.22
the elastcity of demand is -2.22