Rain spoils the strawberry crop. As a result, the price of strawberries rises from $4 to $6 a box and the quantity decreases from 1,000 to 600 boxes a week. Use the midpoint formula to derive the price elasticity of demand over this price range. Then state if the demand for strawberries is elastic, inelastic, or unit elastic.
Please help!! Thank you! :)

Question

Rain spoils the strawberry crop. As a result, the price of strawberries rises from $4 to $6 a box and the quantity decreases from 1,000 to 600 boxes a week. Use the midpoint formula to derive the price elasticity of demand over this price range. Then state if the demand for strawberries is elastic, inelastic, or unit elastic.
Please help!! Thank you! :)

anonymous · Answer

PED = $$( (600 - 1000)/(1600/2) )\div ( (6-4)/(10/2) ) = -0.5 \div 0.4= -1.25$$
since the absolute value is greater than 1, the demand is elastic