Answer:
0.18
Step-by-step explanation:
Given that:
P₁ = $10, P₂ = $20
From the tables Q₁ = 900, Q₂ = 800
Using midpoint method:
Percentage change in quantity = [tex]\frac{Q_2-Q_1}{(Q_1+Q_2)/2} *100\%=\frac{800-900}{(900+800)/2}*100\%= -11.76\%\\[/tex]
Percentage change in price =
[tex]\frac{P_2-P_1}{(P_1+P_2)/2} *100\%=\frac{20-10}{(20+10)/2}*100\%= 66.67\%\\[/tex]
Price of elastic demand = Percentage change in quantity/ Percentage change in price = -11.76% / 66.67% = 0.18
The Price of elastic demand is positive because we took the absolute value and elasticity are always positive
Therefore since Price of elastic demand < 1, the demand is inelastic in this interval.
This means that, along the demand curve between $10 to $20, if the price changes by 1%, the quantity demanded will change by 0.18%. A change in the price will result in a smaller percentage change in the quantity demanded. For example, a 10% increase in the price will result in only a 1.8% decrease in quantity demanded and a 10% decrease in the price will result in only a 1.8% increase in the quantity demanded
