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2 years ago

According to the midpoint method, the price elasticity of demand between points A and B is approximately (0, 0.6, 1.67, 22.5) .

Business

1 answer:

kvv77 [185]2 years ago

7 0

Because the demand between points A and B is inelastic, a $25-per-bike increase in price will lead to an increase, in total revenue per day.

in order for a price decrease to cause a decrease in total revenue, demand must be inelastic.

<h3>What is the price elasticity of demand? </h3>

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

When the coefficient of elasticity is less than one, it means that demand is inelastic. When demand is inelastic, it means that the quantity demanded is not sensitive to changes in price.

Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price

Midpoint change in quantity demanded = change in quantity demanded / average of both demands

change in quantity demanded = 40 - 35 = 5
Average of both demands = (40 + 35) / 2 = 37.50
Midpoint change in quantity demanded = 5 / 37.50 = 0.133

Midpoint change in price = change in price / average of both price

Change in price = 100 - 125 = -25
Average of both prices = (100 + 125) / 2 = 112.50
Midpoint change in price = -25 / 112,50 = -0,222

Midpoint elasticity of demand = 0.133 / -0,222 = 0.6

To learn more about price elasticity of demand, please check: brainly.com/question/18850846

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3 years ago

Barney wants to start a new business that yields a profit ofâ€‹ 20% per year after a period of 2 years. In thisâ€‹ period, if he

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3 years ago

Park Company reports interest expense of $340,000 and income before interest expense and income taxes of $6,120,000.(1) Compute

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Answer: 1. 18 times

2. Park is in better position

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3 years ago

On January 1, 2019, Oriole Company purchased the following two machines for use in its production process.

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Answer and Explanation:

The journal entries are shown below:

1 Equipment $53,420

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To Accumulated Depreciation - Equipment $9,614

(Being the depreciation expense is recorded)

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3 years ago

The city of Brock’s Water Enterprise Fund leases water treatment equipment. The life of the noncancellable lease is 10 years, an

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<u>Solution and Explanation:</u>

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Date Particulars and details Debit($) Credit($)

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(Being Record the Second Lease Payment)

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3 years ago