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The price for a cell phone case is $25 with the quantity demanded at 10,000 a day. As time goes on the price for a cell phone case increases to $30 and the quantity demanded decreases to 5,000 a day. Based on the price elasticity of demand using the midpoint method, this cell phone case isSelect one:a. unit elasticb. inelasticc. Perfectly elasticd. elastic

Respuesta :

Answer:

d. Elastic

Explanation:

Elasticity (by midpoint formula) = (Q2-Q1) / [(Q2+Q1)/2]

                                                        (P2-P1) / [(P2+P1)/2]

Cell Phone : P1 = 25 ; P2 = 10000 ;  P2 = 30 ; Q2 = 5000

Putting in the above formula : Elasticity =

                               =    (5000-10000) [(5000+10000)/2]  

                                            (30-25) / [(30+25)/2]

                                                              = 5000/7500

                                                                 5/27.5

                                                               = 0.66/ 0.18

                                                               = 3.66

Since the Elasticity = 3.66 i.e > 1 , The demand for cell phone is elastic.

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