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

question 248

Multiple Choice

Using the midpoint method,the price elasticity of demand for a good is computed to be approximately 0.75.Which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

• A)a 7.5 increase in the price of the good
• B)a 13.33 percent increase in the price of the good
• C)an increase in the price of the good from $7.50 to $10
• D)an increase in the price of the good from $10 to $17.50

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Definitions:

Base Year

A specific year against which economic or financial data is compared over time for the purpose of analysis.

Financial Data

Quantitative information related to a company's financial performance, including income, expenses, assets, liabilities, and equity.

Return On Total Assets

A financial ratio indicating the profitability of a company relative to its total assets, showing how effectively a company is using its assets to generate profits.

After-Tax Effect

The impact of transactions on a company's net income after accounting for taxes, reflecting the true financial outcome.