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Sagot :
Answer:
-1.57
-2.2
Explanation:
Using the midpoint method, your price elasticity of demand as the price of pizzas increases from $10 to $12 is if your income is $20,000 and if your income is $24,000.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price
Midpoint change in quantity demanded = change in quantity demanded / average of both demands
midpoint change in price = change in price / average of both price
Elasticity when income is $20,000
change in quantity demanded = 24 - 32 = -8
average of both demands = (24 + 32) / 2 = 28
-8/28 =-0.286
change in price = 12 - 10 = 2
average of both prices = (12 + 10) / 2 = 11
2/11 = 0.182
Midpoint elasticity = -0.286 / 0.182 = -1.57
When income is $24,000
change in quantity demanded = 30 - 45 = -15
average of both demands = (30 + 45) / 2 = 37.50
-15/37.50 = -0.4
change in price = 12 - 10 = 2
average of both prices = (12 + 10) / 2 = 11
2/11 = 0.182
Midpoint elasticity = -0.4 / 0.182 = -2.20
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