Suppose at $10 the quantity demanded is 100.When the price falls to $8,the quantity demanded increases to 130.The price elasticity of demand (using the midpoint formula) between $10 and $8 is approximately:

A) 1.17.
B) 1.50.
C) 0.85.
D) 1.00.

The midpoint formula for price elasticity of demand is: $E_d=\frac{\%\Delta QD}{\%\Delta P}$ , where $\Delta QD$ is the change in quantity demanded and $\Delta P$ is the change in price. Using the midpoint formula, the change in quantity demanded is from 100 to 130, and the change in price is from $10 to $8. The midpoint for quantity is $\frac{100+130}{2}=115$ , and the midpoint for price is $\frac{10+8}{2}=9$ . Thus, $\%\Delta QD=\frac{130-100}{115}\approx 0.2609$ or 26.09%, and $\%\Delta P=\frac{8-10}{9}\approx -0.2222$ or -22.22%. Therefore, $E_d=\frac{0.2609}{-0.2222}\approx -1.17$ . The elasticity is negative, indicating the inverse relationship between price and quantity demanded, but we often refer to the absolute value when discussing elasticity, making the correct answer approximately 1.17.