Answer to Question #122659 in Microeconomics for Brenda Formin

Question

3. The following data shows the relationship between price and quantity demanded at four different prices for a product:

P = $11, Qd = 16
P = $9, Qd = 24
P = $7, Qd = 32
P = $5, Qd = 40

Using the midpoints formula, what is the price elasticity of demand between: (a) $11 and $9; (b) $9 and $7; (c) $7 and $5?

Answer 1

A ) $P_1=11,Q_1=16$

$P_2,Q_2=24$

$ed=\frac{16-24}{16+24}\frac2{100}\frac{11-9}{11+9}\frac2{100}$

$=\frac{-8/20}{2/10}$

$=2$

B) $P_1=9,Q_1=24$

$P_2=7,Q_2=32$

$=$ $ed=\frac{32-24}{32+24}\frac2{7-9}\frac2{100}$

$=\frac{8/28} {-2/8}$

$=1.14$

B) $P_1=9,Q_1=32$

$P_2=5,Q_2=40$

$=\frac{40-32}{40+32}\frac2{100}\frac{5-7}{5+7}\frac2{100}$

$=\frac{12/36}{-2/6}$

$=1$