Business: If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, then the price elasticity of demand (by the midpoint method) is:

Market power because it is the ability of a firm to set on price of goods ( when both firms merges to have power over market...

If the price of chocolate-covered peanuts decreases

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yoyo2697

04.02.2022

Business

Price elasticity of demand = -0.05

Explanation:

Price elasticity of demand using the midpoint method= $\frac{(Q2- Q1)/(Q2+Q1)/2}{(P2- P1)/(P2+P1)/2}$

where Q =Quantity demanded

P = Price

Price elasticity of demand = ( $\frac{(210-190/210+190)/2}{0.90-1.10/ 0.90+1.10)/2}$

= $\frac{20/400)/2 }{ -0.2/2)/2}$

0.025/ -0.05 = -0.05

Price elasticity of demand = -0.05

The Price elasticity of demand tells us how much quantity demanded changes in response to a change in price. Here the Demand for a good is inelastic because the PED coefficient is less than one -0.05

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If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 190 bags to 210 bags, then the price elasticity of demand (by the midpoint method) is:

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