Look at the demand curves in the diagrams below. Use the midpoint formula and po

Question

Look at the demand curves in the diagrams below. Use the midpoint formula and points a and b to calculate the elasticity of demand for that range of the demand curve.

Instructions: Enter positive values for elasticities (absolute value). Round your answer to one decimal place.

Elasticity of demand for D1 (points a to b in the diagram above-left) =

Instructions: Enter positive values for elasticities (absolute value). Round your answer to two decimal places.

Elasticity of demand for D2 (points c to d in the diagram above-right) =


Instructions: Enter positive values for elasticities (absolute value). Enter a whole number for your answer.

Elasticity of demand for D3 (points e to f in the diagram above) =

Explanation / Answer

Elasticity of demand for D1 = [(Q2 – Q1) / {(Q1 + Q2) / 2}] / [(P2 – P1) / {(P1 + P2) / 2]

                                              = [(40 – 10) / {(10 + 40) / 2] / [(1 – 2) / {(2 + 1) / 2]

                                              = 1.8

Elasticity of demand for D2 = [(Q2 – Q1) / {(Q1 + Q2) / 2}] / [(P2 – P1) / {(P1 + P2) / 2]

                                              = [(20 – 10) / {(10 + 20) / 2] / [(1 – 4) / {(4 + 1) / 2]

                                              = 0.56

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