Question

Table 5-4

Price	Total Revenue
$10	$100
$12	$108
$14	$112
$16	$112

Table 5-4 Price Total Revenue $10 $100 $12 $108 $14 $112 $16 $112 Refer to Table 5-4. As price rises from $10 to $12, the price elasticity of demand using the midpoint method is approximately

Answer 1

Q=TR/P

Q=100/10=10

Q=108/12=9

and so on

Price	TR	Q
10	100	10
12	108	9
14	112	8
16	112	7

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Elasticity of demand=(change in quantity/average quantity)/(change in price/average price)
Change in quantity=9-10=-1
average quantity=(9+10)/2=9.5
change in price=12-10=2
average price=(12+10)/2=11
Elasticity of demand=(-1/9.5)/(2/11)=-0.578947368=-0.58

the elasticity of demand is -0.58

the demand is inelastic as the elasticity of demand is above -1.