The Midpoint Formula Is Used to Measure the Elasticity of Demand

question 157

Multiple Choice

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve

• A)when demand is elastic.
• B)in special cases when the percentage change in the quantity demanded is equal to the percentage change in price.
• C)to ensure that the elasticity has a negative value.
• D)to ensure that we have only one value of the price elasticity of demand between two points on a demand curve.

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Definitions:

Profit Margin

A measure of profitability calculated as net income divided by revenue, or net profits divided by sales.

Interval Measure

Interval measure is a financial metric that assesses a company's ability to meet its current operational expenses by comparing its current assets to its current cash outflows.

Net Fixed Assets

These are a company's total fixed assets minus its accumulated depreciation, representing the actual value of the company’s fixed assets.

Average Daily Operating Costs

The average amount spent by a business on its day-to-day operational activities, divided by the number of days in the period.