Question

At a price of $2, the quantity demanded for pens is 16. When the price increases to $3, the quantity demanded for pens is 14. Using the midpoint method, the price elasticity of demand for pens is ________________________.

Answer 1

The price elasticity of demand for pens using the midpoint method is -0.3333.

Step-by-step explanation:

To calculate the price elasticity of demand using the midpoint method, we use the formula:

Elasticity = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))

Given that the price increases from $2 to $3 and the quantity demanded decreases from 16 to 14, we can substitute these values into the formula:

Elasticity = ((14 - 16) / ((14 + 16) / 2)) / ((3 - 2) / ((3 + 2) / 2))

Elasticity = (-2 / 15) / (1 / 2.5)

Elasticity = -0.1333 / 0.4

Elasticity = -0.3333

Therefore, the price elasticity of demand for pens using the midpoint method is -0.3333.