Question

Using the midpoints formula, what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?

Answer 1

Mid point price elasticity of demand = 0.8

Step-by-step explanation:

The elasticity of demand is he degree of responsiveness of quantity demand to a change in unit price.

A mid point elasticity uses average value for the denominator to determine the percentage change

Mid point price elasticity= % change in quantity / % change in price

Change in quantity = (6000-4000)/((6000+4000)/2

= 40%

Change in price = (10,000-6000+/((10000+6000)/2)

Mid point elasticity = 40%/50%

= 0.8