Question

The midpoint method is used to compute elasticity because it A. automatically rounds quantities to the nearest whole unit. B. gives the same answer regardless of the direction of change. C. automatically computes a positive number instead of a negative number. D. results in an elasticity that is the same as the slope of the demand curve. Save and Continue

Answer 1

Answer:

B. gives the same answer regardless of the direction of change

Explanation:

The computation of the price elasticity of demand using mid point formula is shown below:

Price elasticity of demand = (Percentage change in quantity demanded) ÷ (percentage change in price)

where,

Percentage change in quantity demanded is

= (change in quantity demanded ÷ average of quantity demanded)

And,

The percentage change in price is

= (percentage change in price ÷ average of price)

Therefore, it reflects the same answer