The figure to the right illustrates the demand for taxi ride

The figure to the right illustrates the demand for taxi rides in a large city. Suppose the price per ride is initially $ 15 but then falls to $10 due a recession. What is the price elasticity of demand for taxi rides? Using the midpoint formula, the price elasticity of demand is . (Enter your response rounded to two decimal places. )

Solution

Mid-point formula:

The price elasticity of demand is -0.09.

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