Suppose the price of apples increases from $20 to $27, and in response quantity demanded decreases from 108 to 98. Using the mid-point formula, what is the price elasticity of demand

-0.325

Explanation:

The computation of the price elasticity of demand using mid point formula is shown below:

= (change in quantity demanded ÷ average of quantity demanded) ÷ (percentage change in price ÷ average of price)  

where,  

Change in quantity demanded is

= Q2 - Q1

= 98 - 108

= -10

And, average of quantity demanded is

= (98 + 108 ) ÷ 2

= 103

Change in price is

= P2 - P1

= $27 - $20

= $7

And, average of price is

= ($27 + $20) ÷ 2

= 23.5

So, after solving this, the price is -0.325

A)      2,679.45

B)   50,909.55

C) 1,071,780

Explanation:

The bank will keep 5% of the deposit:

53,589 x 5% = 2,679.45‬

Then, it will have in excess the remainder:

53,589 - 2,679.45 = 50,909.55‬

This amount can be used for another.

This makes a hypothetical loop. The borrower can also deposit and creating the chance or another loan and so on. The cycle repeats indefinitely

The maximum amount of new money can be determinate as follow:

53,589 / 0.05 = 1,071,780