Introduction to Economics 1 Deneme Sınavı Sorusu #1256837
How the use of mid-point approach of price elastic of demand differs from the standard way to compute price elasticity of demand?
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It is calculated as the percentage change in the quantity demanded of the good divided by the percentage of change in the price of that good. |
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The mid-point method calculates the percentage change by dividing the change by the average of the initial and final levels of price and quantities. |
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It is calculated as the change in the quantity demanded of the good divided by the change in the price of that good |
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The mid-point method calculates the percentage change by dividing the change by the maximum of the initial and final levels of price and quantities. |
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The mid-point method calculates the percentage change by dividing the change by the minimum of the initial and final levels of price and quantities. |
Price Elasticity of Demand-Mid-point Approach
When we take two points such as points A and B, on the demand curve, then calculating the price elasticity of demand moving from point A to B or B to A and have the same elasticity measure requires the following equation. Different than the standard way to compute price elasticity of demand, the mid-point method calculates the percentage change by dividing the change by the average of the initial and final levels of price and quantities.
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