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Mankiw Chapter 5: midpoint method for the price elasticity of ice-cream demand

ToolBreak-Even and Pricing
SourceMankiw, N. G. (2015). Principles of Economics, 7th ed. Cengage Learning, Stamford, CT. Chapter 5, the midpoint method.
LevelUndergraduate

Problem

When the price of an ice-cream cone rises from $2.00 to $2.20 the quantity demanded falls from 10 to 8 cones. Compute the price elasticity of demand by the midpoint method.

Inputs to Enter

  • Price elasticity analysis: observations 2.00 10 / 2.20 8
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Answers

  • Quantity change 22.2 % (printed 22 %), price change 9.52 % (printed 9.5 %); elasticity 2.333 exact (the book prints 2.32 from the rounded percentages)

Notes

Choose the price-elasticity analysis and paste the two observations in place of the default six-point table.

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