Author Question: What is the midpoint formula and why is it used? What will be an ideal ... (Read 51 times)

casperchen82 · **on:** Jun 29, 2018

What is the midpoint formula and why is it used?

What will be an ideal response?

Question 2

Suppose that you have saved 100 . You can spend it today or you can put it in your savings account for a year and earn 5 interest. What is the opportunity cost of spending the money today?

What will be an ideal response?

parshano · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The midpoint formula is a convention of calculating elasticity percentages using the values halfway between the initial and new price and quantity demanded values. It is used so an elasticity calculation will not depend on the direction of the change in quantity demanded due to a change in price.

Answer to Question 2

If you put the money in your savings account, you will have 105 to spend next year on the item (or items) of your choice. Thus, the opportunity cost of spending the money today is the enjoyment you give up by not having the 105 to buy something next year.