QUESTION 1 e the price elasticity of demand using the mid po

QUESTION 1 e the price elasticity of demand using the mid points formula for a demand curve segment described by the Calculat following When the price of milk is $7 the quantity demanded is 1,065.9 If the price of milk drops to$3.1, the quantity demanded is1,227.3. Enter the calculated answer using 1 decimal place.

Solution

Price

Quantity Demanded

$7

1065.9

$3.1

1227.3

?in Price = 7-3.1 = 3.9

?in QD =1065.9-1227.3=-161.4

Elasticity of demand according to midpoint method

Ed = (?Q/?P) x (P1+P2 / Q1+Q2)

Ed = (-161.4/3.9) x (7+3.1 / 1065.9+1227.3)

Ed = -0.18

Taking the absolute value (ignoring the negative) Ed = 0.1 (one decimal value)

Price	Quantity Demanded
$7	1065.9
$3.1	1227.3
?in Price = 7-3.1 = 3.9	?in QD =1065.9-1227.3=-161.4