Asked by Bryce Takeyama on Jul 26, 2024
Verified
Refer to Figure 5.2. If the price of a hamburger increases from $8 to $10, the price elasticity of demand equals ________. Use the midpoint formula.
A) -0.33
B) -3.0
C) -30.
D) -300
Midpoint Formula
A method used in economics to calculate the elasticity of a demand or supply curve, representing the percentage change in quantity demanded or supplied relative to a percentage change in price.
Price Elasticity
A measure of how much the demand for a product changes in response to a change in its price.
Hamburger
A popular food item consisting of a cooked patty of ground meat, usually beef, placed inside a sliced bun.
- Compute the price elasticity of demand by applying the midpoint formula.
Verified Answer
SJ
srajan jaiswalJul 29, 2024
Final Answer :
B
Explanation :
The midpoint formula for price elasticity of demand is [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)], where Q1 and Q2 are the initial and final quantities demanded, and P1 and P2 are the initial and final prices. Without specific quantities from Figure 5.2, we can't calculate the exact value, but given the options, -3.0 is a plausible value for price elasticity of demand, indicating a relatively elastic demand. The other options are either too extreme or not correctly reflecting typical elasticity values.
Learning Objectives
- Compute the price elasticity of demand by applying the midpoint formula.