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If the price elasticity of demand for used cars priced between $4,000 and $6,000 is -0.9 (using the mid-point method), what will be the percent change in quantity demanded when the price of a used car falls from $6,000 to $4,000

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Parrain

Answer: 36% increase in quantity demanded.

Explanation:

Price Elasticity shows the change in quantity demanded when there is a change in price.

Change in Quantity demanded = Price elasticity * Change in price.

Change in price using midpoint formula;

[tex]= \frac{New price - Old Price}{\frac{New Price + Old Price }{2} } \\\\= \frac{4,000 - 6,000}{\frac{4,000 + 6,000 }{2} } \\\\= \frac{-2,000}{5,000} \\\\= -0.4[/tex]

Change in Quantity demanded = -0.9 * -0.4

= 0.36

= 36% increase

Tundexi

When the price of THE used car falls from $6,000 to $4,000, the percent change in quantity demanded  will be 36% increase.

Explanation:

Price Elasticity basically shows the change in quantity demanded when there is a change in price.

The formula for Change in Quantity demanded = Price elasticity * Change in price.

Change in price using midpoint formula = New price - Old price / (New price - Old price / 2)

Change in price using midpoint formula = 4000 - 6000 / (4000 - 6000/ 2)

Change in price using midpoint formula = -0.4

Change in Quantity demanded = -0.9 * -0.4

Change in Quantity demanded = 0.36

Change in Quantity demanded = 36% increase

In conclusion, the percent change in quantity demanded  will be 36% increase.

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