Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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How to interpret this solution?
![Point
A
B
Price Quantity demanded
P1=10
P2=15
Q1=20
Q2=18
Price elasticity of demand (Mid-Point method)
Ed= [(Q2-Q1)/(P2-P1)] * [(P2+P1) / (Q2+Q1)]
=> Ed = [(18-20) / (15-10)] * [(15 +10) / (18+20)]
=> Ed = [-2/5] * [25/38]
=> Ed = -0.26316
=> Ed = -0.26
Hence, the price elasticity of demand is -0.26](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F419302f0-9945-4af2-a5e6-57b171cb4d6d%2Ffd366882-9c09-4459-baa2-8f6af66a5648%2Ftxojlhw_processed.png&w=3840&q=75)
Transcribed Image Text:Point
A
B
Price Quantity demanded
P1=10
P2=15
Q1=20
Q2=18
Price elasticity of demand (Mid-Point method)
Ed= [(Q2-Q1)/(P2-P1)] * [(P2+P1) / (Q2+Q1)]
=> Ed = [(18-20) / (15-10)] * [(15 +10) / (18+20)]
=> Ed = [-2/5] * [25/38]
=> Ed = -0.26316
=> Ed = -0.26
Hence, the price elasticity of demand is -0.26
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