Chapter 5, Problem 2CQQ

### Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

Chapter
Section

### Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

# The price of a good rises from $8 to$12, and the quantity demanded falls from 110 to 90 units. Calculated with the midpoint method, the price elasticity of demand isa. 1/5.b. 1/2.c. 2.d. 5.

To determine
The measuring price elasticity of demand.

Explanation

Option (b):

By midpoint method; the price elasticity of demand occurs when the price of a good rises from $8 to$12, and the quantity demanded falls from 110 to 90 units is calculated as follows:

Price elasticity of demand=(11090)((110+90)2)÷(128)((12+8)2)=20100÷410=0.20.4=12

The price elasticity of demand is 0

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