Using the midpoint method (show your work), calculate the price elasticity of demand when the price of a barrel of gosum berries rises from $10 to $20. What kind of elasticity is this value that you computed for the price elasticity of demand and what does it mean for how demand will change based on a change in price within this price range?

0.18

Step-by-step explanation:

Given that:

P₁ = $10, P₂ = $20

From the tables Q₁ = 900, Q₂ = 800

Using midpoint method:

Percentage change in quantity =

Percentage change in price =

Price of elastic demand = Percentage change in quantity/ Percentage change in price = -11.76% / 66.67% = 0.18

The Price of elastic demand is positive because we took the absolute value and elasticity are always positive

Therefore since Price of elastic demand < 1, the demand is inelastic in this interval.

This means that, along the demand curve between $10 to $20, if the price changes by 1%, the quantity demanded will change by 0.18%. A change in the price will result in a smaller percentage change in the quantity demanded. For example, a 10% increase in the price will result in only a 1.8% decrease in quantity demanded and a 10% decrease in the price will result in only a 1.8% increase in the quantity demanded

step-by-step explanation: