Question

Jaycee Jeans sold 40 pairs of jeans at a price of​ $40. When it lowered its price to​ $20, quantity sold increased to 60 pairs. Calculate the absolute value of the price elasticity of​ demand? Use the midpoint formula.

Answer 1

0.6

Step-by-step explanation:

Answer 2

0.6

Step-by-step explanation:

Initial Units sold, Q1 = 40 pairs

Initial Price, P1 = $40

Final price, P2 = $20

Final units sold = 60 pairs

Now,

Using the midpoint formula,

the absolute value of the price elasticity of​ demand

price elasticity of​ demand =
`((Change in quantity sold)/((Total quantity sold)/(2)))/((Change in price)/((Total price)/(2)))`

or

price elasticity of​ demand =
`((Q2-Q1)/((Q1+Q2)/(2)))/((P1-P2)/((P2+P1)/(2)))`

or

price elasticity of​ demand =
`((60-40)/((40+60)/(2)))/((40-20)/((40+20)/(2)))`

or

price elasticity of​ demand =
`((20)/(50))/((20)/(30))`

price elasticity of​ demand = 0.6