Question

Consider the following demand schedule for bags. Price Quantity ​$99 5252 ​$1111 4848 ​$1313 4040 When the price of bags rises from ​$99 to ​$1111​, the price elasticity of demand is approximately nothing. ​(Calculate using the midpoint​ formula, round your answer to one decimal​ place, and enter a​ "-" if your answer is​ negative.)

Answer 1

PED= "0.1"

Step-by-step explanation:

The price elasticity of demand indicates how the quantity demanded changes when the price changes. Is defined by this equation:

Price Elasticity of Demand(PED)= Percentage change in Q (Δ%Q)/ Percentage change in P (Δ%P) .

To fine the percentage change in Q and in P we use the midpoint formula:

Δ%Q= q2-q1/(q2+q1/2)

Δ%Q= 4848-5252/(5252+4848/2)

Δ%Q= -404/5050

Δ%Q= -0.08

Δ%P= p2-p1/(p2+p1/2)

Δ%P= 1111-99/(1111+99/2)

Δ%P= 1012/605

Δ%P= 1,672

PED=-0.08/1,672

PED= -0.047

Rounded to one decimal place:

PED= "0.1"