Property rights facilitate the development of trade. Indicate ...

[Chloeellawright]

Property rights facilitate the development of trade.
 
  Indicate whether the statement is true or false

Question 2

If the price of suntan lotion increases from 6 to 8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?
 
  What will be an ideal response?

[coreycathey]

Answer to Question 1

TRUE

Answer to Question 2

The price elasticity of demand = (percentage change in the quantity demanded)  (percentage change in the price). Use the midpoint method to calculate the percentages. Thus the percentage change in the quantity demanded = (900,000 - 845,000 )  (872,500 ) = 6.3 percent and the percentage change in the price is (8 - 6 )  (7 ) = 28.6 percent. Therefore the elasticity of demand equals (6.3 percent)  (28.6 percent) = 0.22.

[Chloeellawright]

Thanks for the timely response, appreciate it

[covalentbond]

YES! Correct, THANKS for helping me on my review