Answer:
The elasticity is - 0.5
Explanation:
In this question, we apply the price elasticity of demand formula with the mid-point formula which is shown below:
Price elasticity of demand = Percentage change in quantity demanded ÷
Percentage change in price
where,
Percentage change in quantity demanded equals to
= New quantity - old quantity ÷ new quantity + old quantity ÷ 2
= 90 - 110 ÷ 90 + 110 ÷ 2
= -20 ÷ 100
= - 0.2
Percentage change in price equals to
= New price - old price ÷ new price + old price ÷ 2
= 12 - 8 ÷ 12 + 8 ÷ 2
= 4 ÷ 10
= 0.4
Now apply the values to the above formula, so the answer would be
= -0.2 ÷ 0.4
= - 0.5
Hence, the elasticity is - 0.5
