00:02
Hello, in order to answer this question, we will use the midpoint formula.
00:12
Let me first remind you this formula.
00:16
So we divide the percent change in quantity, which is quantity 2 minus quantity 1 over quantity 2 2 plus quantity 1 so this fraction is a percentage change in quantity and we divide it by percent change in price which is price 2 minus price 1 over price price price 2 plus so we will use this midpoint formula to calculate price and assistity of demand for all three regions.
01:39
And let's start with the first region.
01:42
It's wx region.
01:49
So here quantity 2 is 15, quantity 1 is 6.
01:56
Price 2 is 140 price 1 is 280 price 1 is 280 so using the price elastic of demand formula using the midpoint approach we can have this we have this fraction 15 minus 6 over 15 plus 6 and we divide this by 140 minus 280 over 140 over 140 over 140 plus 280 and the result approximately will be minus 1 .3.
03:34
So since the absolute value of the price elasticity of demand is greater than 1, in this region demand is elastic.
03:50
So we can answer that demand is elastic.
03:52
So we can answer that demand is elastic between w and x.
04:00
The next region is xy.
04:08
Using the same formula, we calculate the price illicitive demand.
04:15
It's 21 minus 15 over 21 plus 15.
04:31
And we divide this fraction by 100.
04:37
100 minus 140 over 100 plus 100 plus 140 and this is equal to minus 1 or the absolute value of the price elastic of demand is equal to 1 this means that in this region demand is unit elastic and lastly we have the last region y z and here we have 42 minus 21 over 42 plus 21 and we divide this by 40 minus 100 over 40 plus 100 approximately it's equal to minus 0 .8 so the absolute value of the price or assistive demand in this region is less than 1...