Respuesta :
Answer:
2.69
Explanation:
Given:
Initial price of the orange = $120
Final price of the orange = $180
Initial quantity of orange sold = 800 tons
Final quantity of orange sold = 240 tons
Now,
In midpoint formula
the percent change is given as
= [tex]\frac{\textup{Change in quantity}}{\textup{Average quantity}}\times100%[/tex]
therefore,
The percent change in price of orange = [tex]\frac{\textup{Change in price}}{\textup{Average price}}\times100%[/tex]
also,
Average price of orange = [tex]\frac{\textup{120 + 180}}{\textup{2}}[/tex] = $150
thus,
The percent change in price of orange = [tex]\frac{|\textup{180-120}|}{\textup{150}}\times100%[/tex] = 0.4%
and,
The percent change in quantity of orange = [tex]\frac{\textup{Change in price}}{\textup{Average price}}\times100%[/tex]
also,
Average quantity of orange sold = [tex]\frac{\textup{800 + 240}}{\textup{2}}[/tex] = 520
thus,
The percent change in quantity of orange sold= [tex]\frac{\textup{800-240}}{\textup{520}}\times100%[/tex] = 1.0769
Therefore,
Absolute value of the price elasticity of demand
= [tex]\frac{\textup{percent change in quantity of orange sold}}{\textup{percent change in price of orange}}[/tex]
= [tex]\frac{\textup{1.0769}}{\textup{0.4}}[/tex]
= 2.69
