Original Price was 160 with 12 qty & 140 16 qty. According to the midpoint metho
ID: 1225513 • Letter: O
Question
Original Price was 160 with 12 qty & 140 16 qty.
According to the midpoint method, the price elasticity of demand between points A and B is approximately .
40*36=1440
60*32=1920
80*28=2240
100*24=2400
120*20=2400
140*16=2240
160=12=1920
According to the midpoint method, the price elasticity of demand between points A and B is approximately? 0, 0.47, 2.14 or 30.01
Suppose the price of bikes is currently $160 per bike, shown as point A on the initial graph. Because the demand between points A and B is "elastic, inelastic or unit elastic??" , a $20-per-bike decrease in price will lead to "a decrease, increase or no change ??" in total revenue per day.
In general, in order for a price increase to cause a decrease in total revenue, demand must be ."elastic, inelastic or unit elastic?
please answer all
Explanation / Answer
Q1 = 12, P1 = 160, AND Q2 = 16, P2 = 140
Price elasticity = [( Q2 - Q1) / {(Q1 + Q2) /2} ] / [(P2 - P1) / {(P1 + P2)/2}]
= {(16 - 12) / [(16+12)/2]} / { ( 160 - 140) / [(160 + 140) / 2]}
= [ 4 / 14] / [ 20 / 150] = 2.14
DEMAND IS ELASTIC between these two points.
A $20 per bike decease in price will lead to an increase in total revenue per day.
In general, in order for a price increase to cause a decrease in total revenue, demand must be elastic.
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