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The data below represent a demand schedule.

Product Price: $30, $25, $20, $15, $10
Quantity Demanded: 5, 15, 25, 35, 45

Using the midpoint approach, determine the price elasticity of demand between each of the following prices:

A. Between P1 = $30 & P2 = $25, Ed=?
B. Between P1 = $25 & P2 = $20, Ed=?
C. Between P1 = $20 & P2 = $15, Ed=?
D. Between P1 = $15 & P2 = $10, Ed=?

Round your answers to two decimal places. Enter your answers as a positive value (absolute value).

Sagot :

Lanuelidn

By using the midpoint approach, the price elasticity of demand between each of the given prices are:

  1. 5.50
  2. 2.25
  3. 1.17
  4. 0.63

What is the price elasticity of demand?

The price elasticity of demand measures the responsiveness of the quantity demanded by a consumer with respect to a specific change in price of the product, all things being equal (ceteris paribus).

By using the midpoint approach, the price elasticity of demand between each of the given prices is given by:

Price elasticity of demand = (Q₂ - Q₁)/[(Q₂ + Q₁)/2]/(P₂ - P₁)/[(P₂ + P₁)/2]

Price elasticity of demand = (15 - 5)/[(15 + 5)/2]/(25 - 30)/[(25 + 30)/2]

Price elasticity of demand = 1/-0.1818

Price elasticity of demand = 5.50.

Part B.

Price elasticity of demand = (Q₂ - Q₁)/[(Q₂ + Q₁)/2]/(P₂ - P₁)/[(P₂ + P₁)/2]

Price elasticity of demand = (25 - 15)/[(25 + 15)/2]/(20 - 25)/[(20 + 25)/2]

Price elasticity of demand = 0.5/-0.2222

Price elasticity of demand = 2.25.

Part C.

Price elasticity of demand = (Q₂ - Q₁)/[(Q₂ + Q₁)/2]/(P₂ - P₁)/[(P₂ + P₁)/2]

Price elasticity of demand = (35 - 25)/[(35 + 25)/2]/(15 - 20)/[(15 + 20)/2]

Price elasticity of demand = 0.33/-0.2857

Price elasticity of demand = 1.17.

Part D.

Price elasticity of demand = (Q₂ - Q₁)/[(Q₂ + Q₁)/2]/(P₂ - P₁)/[(P₂ + P₁)/2]

Price elasticity of demand = (45 - 35)/[(45 + 35)/2]/(10 - 15)/[(10 + 15)/2]

Price elasticity of demand = 0.25/-0.4

Price elasticity of demand = 0.63.

Read more on price elasticity here: https://brainly.com/question/24384825

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