Question

Joe's Campus Grille priced its hamburgers at ​$2.00​, they sold 200 per week. When the price was ​$3.00​, they sold 150 per week. Based on this information and using the​ average-values formula, the absolute value of the price elasticity of demand for hamburgers is A. 2.00 B. 1.41 C. 0.50 D. 0.71 Based on the above​ calculation, demand for hamburgers is considered to be ▼ inelastic unit-elastic elastic .

Answer 1

$0.71 and inelastic

Step-by-step explanation:

The computation of the price elasticity of demand using mid point formula is shown below:

= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price

where,

Change in quantity demanded is

= Q2 - Q1

= 200 - 150

= 50

And, average of quantity demanded is

= (200 + 150) ÷ 2

= 175

Change in price is

= P2 - P1

= $3 - $2

= $1

And, average of price is

= ($3 + $2) ÷ 2

= $2.5

So, after solving this, the price elasticity of demand is $0.71

This shows inelastic of demand