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ID: 1129378 • Letter: P
Question
Please show your work Home Grades Personalized ReviewsDiscussion Course Materialts icity Assignment | Back to Assignment Due Monday 12.18.17a empts: 0Keep the Highest: 0/5.8 Using the midpoint method The following graph shows two known points (X and Y) on a demand curve for asperagus PRICE Doilars per bunch Demand 012 1 20 24 According to the midpoint method, the price elasticity of demand for asparagus between point X and point Y is approximately 0.which suggests that the demand for asparagus is 1.29 between point X and point Y 0.78 0.6 withot saving
Explanation / Answer
Answer:
According to the midpoint method, the price elasticity of demand for asparagus between point X and point Y is approximately 0.41 , which suggests that the demand for asparagus is price inelastic between points X and Y
Working:
Using the midpoint method, the percentage change in price between points X and Y can be calculated as follows:
Percentage Change in Price: 100% * [(2-1.5) / {(2+1.5)/2}] = 100% * 0.5/1.75 = 28.6%
Thus, moving from point X to point Y results in a 28.6% increase in price.
Using the midpoint method, the percentage change in the quantity of asparagus demanded can be calculated as follows:
Percentage Change In Quantity = 100% * [(16 - 18) / {(16 + 18) / 2 }] = 100% * -2/17 = -11.8%
Thus, moving from point X to point Y results in an 11.8% decrease in quantity.
The price elasticity of demand is the percentage change in quantity divided by the percentage change in price (ignoring the negative sign):
Price Elasticity of Demand = Percentage Change in Quantity / Percentage Change in Price = 11.8% / 28.6% = 0.41