How to find percent change in price elasticity using the endpoint method? Use th

Question

How to find percent change in price elasticity using the endpoint method?

Use the endpoint method to compute the price elasticity on D1 The endpoint method computes the percent change in quantity or price as the percent change from the starting value. For instance, using the midpoint method to compute elasticity, if we are moving from A to B on D1, the percent change in price is computed as a percent of $5 and the percent change in quantity as the percent change in price computed as a percent of 100 $5 :A D1 D2 80 90 100 From point A to point B, the percent change in price is

Explanation / Answer

Using end-point method, Elasticity of demand = % Change in quantity demanded / % Change in price

% Change in price = $(10 - 5) / $5 = $5 / $5 = 1 = 100%

% Change in quantity demanded = (80 - 100) / 100 = - 20 / 100 = - 0.2 = - 20%

Elasticity of demand = - 20% / 100%

= - 0.2

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