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The price of strawberries falls from $1.50 to $1.00 per carton and the quantity demanded goes from 100,000 to 200,000 cartons. use the midpoint method to find the price elasticity of demand.

Respuesta :

meerkat18
To solve for the price elasticity of demand, we utilize the formula below.

Price elasticity of demand = % Change in Demand Quantity
                                                  % Change in Price

where:    % Change in Demand Quantity = (Qnew -Qold)/Qold
               % Change in Price = (Pnew - Pold/)Pold

Using midpoint method, the formula changes to:

% Change in Demand Quantity = (Qnew -Qold)/Qave = (200000-100000)/150000 = 67%
             
  % Change in Price = (Pnew - Pold/)Pave = (1-1.5)/1.25 = -40%

Price elasticity of demand = 67%/-40% = -1.675%

ANSWER: -1.675%

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