Question

When the price of pistachio nuts is $7.50 per Ib. the quantity demanded is 48 lbs. When the price of pistachio nuts is $9.00 per lb. the quantity demanded is 40 lbs. When the midpoint formula is used to measure the price elasticity of demand we can say that the demand for pistachio nuts is A) relatively, but not perfectly, elastic. B) relatively, but not perfectly, inelastic. C) completely inelastic. D) unit elastic.

Answer 1

Option "D" is the correct answer to the following statement.

Unit-Elastic

Step-by-step explanation:

Given:

P0 = $7.50 per lbs

Q0 = 48 lbs

P1 = $9.00 per lbs

Q1 = 40 lbs

Price Elasticity Of Demand = ?

Computation:

`Price \ Elasticity \ Of \ Demand = ((Q1-Q0)/((Q1+Q0)/(2) ) )/((P1-P0)/((P1+P0)/(2) ) ) \\Price \ Elasticity \ Of \ Demand = ((40-48)/((40+48)/(2) ) )/((9-7.50)/((9+7.50)/(2) ) ) \\Price \ Elasticity \ Of \ Demand = ((8)/((88)/(2) ) )/((1.50\\)/((16.50)/(2) ) )\\ Price \ Elasticity \ Of \ Demand = ((8)/(44) )/((1.50)/(8.25) ) \\\\Price \ Elasticity \ Of \ Demand = 1`

So, Price Elasticity Of Demand = 1 (Unit-Elastic)