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Suppose when the price of a cookie is $2.50, the quantity demanded is 50, and when the price is $1, the quantity demanded is 200. Using the midpoint method, the price elasticity of demand is:

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Answer:

The price elasticity of demand is -1.40

Explanation:

E = [Q2-Q1/(Q2+Q1/2)]/[P2-P1/(P2+P1/2)]

  = [200-50/(200+50/2)] / [1-2.5/(1+2.5/2)]

  = [150/125]/[1.5/1.75]

  = 1.2/0.8571

  = -1.4 0

the price elasticity of demand is -1.40

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