Using the Midpoint Method,the Price Elasticity of Demand for a Good

question 45

Multiple Choice

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 1.5.Which of the following events is consistent with a 3.5 percent increase in the price of the good?

• A)The quantity of the good demanded decreases from 25,294 to 24,000.
• B)The quantity of the good demanded decreases from 50,000 to 48,847.
• C)The quantity of the good demanded decreases by 2.33 percent.
• D)The quantity of the good demanded decreases by 4.29 percent.

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Definitions:

Promissory Note

A financial instrument in which one party promises in writing to pay a determinate sum of money to the other.

Monthly Installment

A fixed payment made every month over a set period to repay a debt.

Accounting Equation

The fundamental formula in accounting that represents the relationship between an entity's assets, liabilities, and equity (Assets = Liabilities + Equity).

Liabilities

Financial obligations or debts that a company owes to others, payable in money, goods, or services.