Solution:
Given data :
Quantity demanded = 100
Price = $10
Price falls to = $8, increase in demand = 130
It is given that the price elasticity of demand by the mid-point method is 1.17 approx.
EP using the mid point method
[tex]$=$ Change in Quantity divided by Change in Price $* \mathrm{P}_{0}+\mathrm{P}_{1}$ divided by $\mathrm{Q}_{0}+\mathrm{Q}_{1}$[/tex]
[tex]=130-100 / 8-10 * 18 / 230[/tex]
[tex]=30 /-2 * 18 / 230[/tex]
= - 1.17
The sign only indicates that EP is always negative.
