## Understanding Price Elasticity of Demand with the Midpoint Method Refer to Figure 5.5. Use the midpoint method to calculate the price elasticity of demand as the price of a gardenburger is increased from $6 to $7. The price elasticity of demand equals: ### Diagram Explanation The figure is a graph showing the demand curve for gardenburgers. The x-axis represents the "Number of gardenburgers" (labeled as `Q`), ranging from 1 to 5 units. The y-axis represents the "Price" of gardenburgers in dollars, ranging from $6 to $10. The demand curve is a straight line with points labeled A through F: - **Point A:** (1 gardenburger, $10) - **Point B:** (2 gardenburgers, $9) - **Point C:** (3 gardenburgers, $8) - **Point E:** (4 gardenburgers, $7) - **Point F:** (5 gardenburgers, $6) The general slope of the curve shows that as the price decreases, the quantity demanded increases, illustrating the law of demand. The task involves calculating the price elasticity of demand as the price moves from $6 (Point F) to $7 (Point E) using the midpoint method. ### Midpoint Method The midpoint method is used to calculate elasticity by averaging starting and ending prices and quantities to find percent changes: \[ \text{Price Elasticity of Demand} = \frac{\left(\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}\right)}{\left(\frac{P_2 - P_1}{(P_2+P_1)/2}\right)} \] Here, \(P_1\) = $6, \(P_2\) = $7, \(Q_1\) = 5, \(Q_2\) = 4. This calculation will provide the elasticity, indicating how sensitive the quantity demanded is to a price change.
## Understanding Price Elasticity of Demand with the Midpoint Method Refer to Figure 5.5. Use the midpoint method to calculate the price elasticity of demand as the price of a gardenburger is increased from $6 to $7. The price elasticity of demand equals: ### Diagram Explanation The figure is a graph showing the demand curve for gardenburgers. The x-axis represents the "Number of gardenburgers" (labeled as `Q`), ranging from 1 to 5 units. The y-axis represents the "Price" of gardenburgers in dollars, ranging from $6 to $10. The demand curve is a straight line with points labeled A through F: - **Point A:** (1 gardenburger, $10) - **Point B:** (2 gardenburgers, $9) - **Point C:** (3 gardenburgers, $8) - **Point E:** (4 gardenburgers, $7) - **Point F:** (5 gardenburgers, $6) The general slope of the curve shows that as the price decreases, the quantity demanded increases, illustrating the law of demand. The task involves calculating the price elasticity of demand as the price moves from $6 (Point F) to $7 (Point E) using the midpoint method. ### Midpoint Method The midpoint method is used to calculate elasticity by averaging starting and ending prices and quantities to find percent changes: \[ \text{Price Elasticity of Demand} = \frac{\left(\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}\right)}{\left(\frac{P_2 - P_1}{(P_2+P_1)/2}\right)} \] Here, \(P_1\) = $6, \(P_2\) = $7, \(Q_1\) = 5, \(Q_2\) = 4. This calculation will provide the elasticity, indicating how sensitive the quantity demanded is to a price change.
Chapter1: Making Economics Decisions
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Problem 1QTC
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![## Understanding Price Elasticity of Demand with the Midpoint Method
Refer to Figure 5.5. Use the midpoint method to calculate the price elasticity of demand as the price of a gardenburger is increased from $6 to $7. The price elasticity of demand equals:
### Diagram Explanation
The figure is a graph showing the demand curve for gardenburgers. The x-axis represents the "Number of gardenburgers" (labeled as `Q`), ranging from 1 to 5 units. The y-axis represents the "Price" of gardenburgers in dollars, ranging from $6 to $10.
The demand curve is a straight line with points labeled A through F:
- **Point A:** (1 gardenburger, $10)
- **Point B:** (2 gardenburgers, $9)
- **Point C:** (3 gardenburgers, $8)
- **Point E:** (4 gardenburgers, $7)
- **Point F:** (5 gardenburgers, $6)
The general slope of the curve shows that as the price decreases, the quantity demanded increases, illustrating the law of demand. The task involves calculating the price elasticity of demand as the price moves from $6 (Point F) to $7 (Point E) using the midpoint method.
### Midpoint Method
The midpoint method is used to calculate elasticity by averaging starting and ending prices and quantities to find percent changes:
\[
\text{Price Elasticity of Demand} = \frac{\left(\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}\right)}{\left(\frac{P_2 - P_1}{(P_2+P_1)/2}\right)}
\]
Here, \(P_1\) = $6, \(P_2\) = $7, \(Q_1\) = 5, \(Q_2\) = 4.
This calculation will provide the elasticity, indicating how sensitive the quantity demanded is to a price change.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8eff56ae-1239-440d-ba2a-4c0283b19249%2Fc32f4086-7754-44af-8e1c-c66c0670cdcc%2Fhuk7wil.jpeg&w=3840&q=75)
Transcribed Image Text:## Understanding Price Elasticity of Demand with the Midpoint Method
Refer to Figure 5.5. Use the midpoint method to calculate the price elasticity of demand as the price of a gardenburger is increased from $6 to $7. The price elasticity of demand equals:
### Diagram Explanation
The figure is a graph showing the demand curve for gardenburgers. The x-axis represents the "Number of gardenburgers" (labeled as `Q`), ranging from 1 to 5 units. The y-axis represents the "Price" of gardenburgers in dollars, ranging from $6 to $10.
The demand curve is a straight line with points labeled A through F:
- **Point A:** (1 gardenburger, $10)
- **Point B:** (2 gardenburgers, $9)
- **Point C:** (3 gardenburgers, $8)
- **Point E:** (4 gardenburgers, $7)
- **Point F:** (5 gardenburgers, $6)
The general slope of the curve shows that as the price decreases, the quantity demanded increases, illustrating the law of demand. The task involves calculating the price elasticity of demand as the price moves from $6 (Point F) to $7 (Point E) using the midpoint method.
### Midpoint Method
The midpoint method is used to calculate elasticity by averaging starting and ending prices and quantities to find percent changes:
\[
\text{Price Elasticity of Demand} = \frac{\left(\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}\right)}{\left(\frac{P_2 - P_1}{(P_2+P_1)/2}\right)}
\]
Here, \(P_1\) = $6, \(P_2\) = $7, \(Q_1\) = 5, \(Q_2\) = 4.
This calculation will provide the elasticity, indicating how sensitive the quantity demanded is to a price change.
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