Question

Using the midpoint method, the price elasticity of demand for jackfruit between point A and point B is approximately what, and how is it determined using the midpoint formula?

Answer 1

To calculate the price elasticity of demand using the midpoint method, obtain the average percentage changes in quantity demanded and price and then divide the quantity percentage change by the price percentage change.

Step-by-step explanation:

Using the midpoint method, the price elasticity of demand for jackfruit between points A and B is determined by calculating the average percentage change in both quantity demanded and price. The formula for the midpoint method is:

Price Elasticity of Demand = (% change in quantity demanded) / (% change in price)

Where:

• % change in quantity = ((Q2 - Q1) / ((Q2 + Q1)/2)) * 100
• % change in price = ((P2 - P1) / ((P2 + P1)/2)) * 100

By using the average of the initial and final quantities (Q1, Q2) and prices (P1, P2), the same elasticity result is obtained whether prices are rising or falling. This step by step explanation guides you through the calculation process:

1. Calculate the change in quantity (Q2 - Q1).
2. Calculate the average quantity ((Q2 + Q1) / 2).
3. Calculate the change in price (P2 - P1).
4. Calculate the average price ((P2 + P1) / 2).
5. Compute the percentage changes using the midpoint formulas.
6. Divide the percentage change in quantity by the percentage change in price to get the elasticity.