Question : Last year the price of corn was $3 per bushel and the quantity of corn demanded was 8 million bushels. This year the price of corn is $4 per bushel and the quantity of corn demanded is 7 million bushels. Assuming that the demand curve has not shifted, what is the price elasticity of demand for corn? (Use the midpoint formula.)
Answer :using midpoint formula:
price elasticity of demand =(((Q2-Q1)/(Q2+Q1)/2)))/(((P2-P1)/(P2+P1)/2)))
price elasticity of demand = ((((7 – 8)/(7+8)/2)))/((((4-3)/(4+3)/2)))
price elasticity of demand = 0.47
