Question 5.1
1. The price of strawberries falls from $1.50 to $1.00 per carton and the quantity demanded goes from 100,000 to 200,000 cartons. Use the midpoint method to find the price elasticity of demand.
By the midpoint method, the percent change in the price of strawberries is
Similarly, the percent change in the quantity of strawberries demanded is
Dropping the minus sign, the price elasticity of demand using the midpoint method is 67%/40% = 1.7.