Instructions: Round your answers to 2 decimal places. If you are entering a negative number include a minus sign. a. Using the midpoint method, what is the price elasticity of demand from a price of $4.00 to a price of $4.50 per iced coffee? , and demand is said to be price (Click to select) . b. Using the midpoint method, what is the price elasticity of demand from a price of $2.00 to a price of $3.00 per iced coffee? , and demand is said to be price (Click to select) . c. Using the midpoint method, what is the price elasticity of demand from a price of $0.50 to a price of $1.00 per iced coffee? , and demand is said to be price (Click to select) .

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raphealnwobi raphealnwobi · Answer 1 · 2020-10-07T04:56:35+02:00

Answer:

The answer is below

Explanation:

The graph is attached below.

a) The price elasticity of demand is given by:

price elasticity of demand = [tex]\frac{\%\ change\ in\ quantity }{\%\ change\ in\ price}=\frac{\Delta Q}{\Delta P}[/tex]

[tex]\Delta Q=\frac{Q_2-Q_1}{(Q_2+Q_1)/2} \\\\\Delta P=\frac{P_2-P_1}{(P_2+P_1)/2}[/tex]

Price of elasticity demand = [tex]\frac{\frac{Q_2-Q_1}{(Q_2+Q_1)/2} }{\frac{P_2-P_1}{(P_2+P_1)/2} }[/tex]

Price of elasticity demand = [tex]\frac{\frac{50-100}{(50+100)/2} }{\frac{4.5-4}{(4.5+4.0)/2} }=\frac{-0.6667}{0.1176} =5.7[/tex]

Since the price of elasticity demand > 1, it is elastic

b) Price of elasticity demand = [tex]\frac{\frac{200-300}{(200+300)/2} }{\frac{3-2}{(3+2)/2} }=\frac{-0.4}{0.4} =1[/tex]

Since the price of elasticity demand = 1, it is unitary

c) Price of elasticity demand = [tex]\frac{\frac{400-450}{(400+450)/2} }{\frac{1-0.5}{(1+0.5)/2} }=\frac{-0.1176}{0.6667} =0.18[/tex]

Since the price of elasticity demand < 1, it is inelastic