Calculate the elasticity of demand between these two price-quantity combinations by using the following steps. After each step, complete the relevant
part of the table with the appropriate answers. (Note: For decreases in price or quantity, enter values in the Change column with a minus sign.)
Quantity
Price
$
Original
$
New
Average
$
Change
Percentage Change
Step 1: Fill in the appropriate values for original quantity, new quantity, original price, and new price.
Step 2: Calculate the average quantity by adding the original quantity and the new quantity, and then dividing by two. Do the same for the average
price.
Step 3: Calculate the change in quantity by subtracting the original quantity from the new quantity. Do the same for the change in price.
Step 4: Calculate the percentage change in quantity demanded by dividing
the percentage change in price.
0.07
6.94
ge in quantity by the average quantity. Do the same to calculate
Step 5: Calculate the price elasticity of demand by dividing the percentage 13.88 in quantity demanded by the percentage change in price, ignoring
the negative sign.
27.76
Using the midpoint method, the elasticity of demand for headsets is about