Using the Midpoint Method, What Is the Price Elasticity of Demand

question 36

Multiple Choice

Using the midpoint method, what is the price elasticity of demand for a product whose price increased from $2 to $4 and whose quantity demanded decreased from 10 to 5 units?

• A) 0.4
• B) 1.0
• C) 0.5
• D) 2.0

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Definitions:

Receivables

Money owed to a company by its customers or others for goods or services that have been delivered or used but not yet paid for.

Cash Realizable Value

The net amount of cash that is expected to be generated from the conversion of assets.

Operating Cycle

The period of time it takes for a company to purchase inventory, sell it, and turn the sales back into cash.

Allowance for Doubtful Accounts

A contra-asset account used to reduce accounts receivable to its net realizable value, anticipating some accounts might not be collected.