Question

Consider the market for a breakfast cereal. the​ cereal's price is initially ​$3.203.20 and 6868 thousand boxes are demanded per week. the company that produces the cereal is considering raising the price to ​$3.703.70. at that​ price, consumers would demand 6363 thousand boxes of cereal per week. what is the price elasticity of demand loading... between these prices using the midpoint formula loading...​?

Answer 1

Price elasticity of demand = percent change in quantity / percent change in price

For the midpoint method, the formula for percent change is

((Q2-Q1)/ (Q2+Q1)/2)*100

(6363-6868) / (6363+6868)/2 *100 = 505/6615.5*100= 7.633

Same thing for Price

(3703.70-3203.20)/(3703.70+3203.20)/2 * 100 = 500.5/5304.95 *100 = 9.434

Then we divide

7.633/9.434 = .809