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marshall27 [118]
3 years ago
5

Suppose the price of gasoline decreases from $4.20 to $2.00, and in response quantity demanded increases from 10600 to 11200. Us

ing the mid-point formula, what is the price elasticity of demand
Business
1 answer:
Tems11 [23]3 years ago
4 0

Answer:

0.079

Explanation:

Price elasticity of demand using midpoint formula can be calculated as follows

Formula

Elasticity of demand = (change in quantity/average quantity)/(change in price/average price)

Calculation

Elasticity of demand = (600/10,900)/(-2.1/3.05)

Elasticity of demand =-0.055 / -0.688

Elasticity of demand =-0.079

working

Change in price (2-4.1) = -2.1  

Average price (2+4.1)/2=3.05

Change in quantity (11,200-10600) = 600

average quantity (11,200+10,600)/2 = 10,900

 

The elasticity of demand is inelastic as the elasticity is below 1.

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Explanation:

Due to the fact there are limited resources in the economy, as more of one product is being produced, there would be less resources available to produce the second good and as a result,  the number of the other good that can be produced would reduce.

As more of one good is produced, the opportunity cost of producing the other good increases.

As more missiles are produced, less consumer goods would be produced and the opportunity cost of consumer goods would increase.

This can be understood by looking at the production possibility curve.

The Production possibilities frontiers is a curve that shows the various combination of two goods a company can produce when all its resources are fully utilised.  

As more quantities of a product is produced, the fewer resources it has available to produce another good. As a result, less of the other product would be produced. So, the opportunity cost of producing a good increase as more and more of that good is produced

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3 years ago
For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following s
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well to be honest man i dont know

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