Question

a. Using the midpoint method, what is the price elasticity of demand from a price of $5.00 to a price of $4.00 per pack of 100 screws

Answer 1

To calculate the price elasticity of demand from a price of $5.00 to a price of $4.00 per pack of 100 screws using the midpoint method, one must know the initial and new quantities demanded. The formula involves dividing the percentage change in quantity by the percentage change in price using averages as base for calculation.

Step-by-step explanation:

The student's question involves calculating the price elasticity of demand using the midpoint method. This method is a way to measure the responsiveness of the quantity demanded to a change in price. It gives the same elasticity value irrespective of whether there is a price increase or decrease, because it uses the average quantity and the average price as the base for the calculation.

To calculate the price elasticity of demand using the midpoint method, we would need to know both the initial and the new quantities demanded at the two price points ($5.00 and $4.00), which are not provided in the question. However, the formula to calculate it would involve dividing the percentage change in quantity demanded by the percentage change in price and using the average values of price and quantity as reference points for these calculations.

Answer 2

-9.09

Step-by-step explanation:

Calculation for the price elasticity of demand

Using the midpoint method.

First step is to find the Demand

Demand = (120 - 0)/((120 + 0)/2) = 2

Demand =120/60

Demand =2

Second step is to find the Price

Price = (4 - 5)/((4 + 5)/2)

Price=- 1/4.5

= -0.22

Now let calculate for the price elasticity of demand

Using this formula

Price elasticity of demand =Demand/Price

Let plug in the formula

Price elasticity of demand=2/-0.22

Price elasticity of demand = -9.09

Therefore Using the midpoint method, the price elasticity of demand will be -9.09