### How to Compute Price Elasticity Using the Endpoint Method on $ D_1 $#### Graphical AnalysisThe graph provided shows the following elements:- Two demand curves, $ D_1 $ (blue) and $ D_2 $ (red).- The price ($ P $) is plotted on the vertical axis, and the quantity ($ Q $) is plotted on the horizontal axis.- Points $ A $, $ B $, and $ C $ are marked on the graph: - Point $ B $ is at a price of $10 and a quantity of 80. - Point $ A $ is at a price of $5 and a quantity of 100. - Point $ C $ marks an intersection on the demand curve $ D_1 $.### Problem StatementUse the endpoint method to compute the price elasticity on $ D_1 $.### Steps to Calculate Price Elasticity1. **Identify the Points:** - Initial Point (Point $ B $): $ (Q_1, P_1) = (80, $10) $ - Final Point (Point $ A $): $ (Q_2, P_2) = (100, $5) $2. **Calculate the Percentage Change in Quantity ($ \Delta Q $) using the Midpoint Formula:** \[ \Delta Q = \frac{Q_2 - Q_1}{(Q_2 + Q_1) / 2} \] \[ \Delta Q = \frac{100 - 80}{(100 + 80) / 2} \] \[ \Delta Q = \frac{20}{90} = 0.222 \, \text{or} \, 22.2\% \]3. **Calculate the Percentage Change in Price ($ \Delta P $) using the Midpoint Formula:** \[ \Delta P = \frac{P_2 - P_1}{(P_2 + P_1) / 2} \] \[ \Delta P = \frac{5 - 10}{(5 + 10) / 2} \] \[ \Delta P = \frac{-5}{7.5} = -0.667 \, \text

Elasticity of demand depicts how much consumer responds with the change in price level.

Answered: Use the endpoint method to compute the…

Use the endpoint method to compute the price elasticity on D1. $10 в $5 A D D2 80 90 100 From point B to point A, the price elasticity: P.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Question

### How to Compute Price Elasticity Using the Endpoint Method on $ D_1 $

#### Graphical Analysis

The graph provided shows the following elements:

- Two demand curves, $ D_1 $ (blue) and $ D_2 $ (red).
- The price ($ P $) is plotted on the vertical axis, and the quantity ($ Q $) is plotted on the horizontal axis.
- Points $ A $, $ B $, and $ C $ are marked on the graph:
- Point $ B $ is at a price of $10 and a quantity of 80.
- Point $ A $ is at a price of $5 and a quantity of 100.
- Point $ C $ marks an intersection on the demand curve $ D_1 $.

### Problem Statement
Use the endpoint method to compute the price elasticity on $ D_1 $.

### Steps to Calculate Price Elasticity

1. **Identify the Points:**
- Initial Point (Point $ B $): $ (Q_1, P_1) = (80, $10) $
- Final Point (Point $ A $): $ (Q_2, P_2) = (100, $5) $

2. **Calculate the Percentage Change in Quantity ($ \Delta Q $) using the Midpoint Formula:**
\[
\Delta Q = \frac{Q_2 - Q_1}{(Q_2 + Q_1) / 2}
\]
\[
\Delta Q = \frac{100 - 80}{(100 + 80) / 2}
\]
\[
\Delta Q = \frac{20}{90} = 0.222 \, \text{or} \, 22.2\%
\]

3. **Calculate the Percentage Change in Price ($ \Delta P $) using the Midpoint Formula:**
\[
\Delta P = \frac{P_2 - P_1}{(P_2 + P_1) / 2}
\]
\[
\Delta P = \frac{5 - 10}{(5 + 10) / 2}
\]
\[
\Delta P = \frac{-5}{7.5} = -0.667 \, \text

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