See the attached file. Using the midpoint formula, calculate elasticity for each of the given changes in demand by a household.
P1 P2 Q1 Q2
a. Long-distance telephone service $0.25/min $0.15/min 300min/month 400min/mth
b. Orange juice 1.49/qt 1.89/qt 14quart/month 12qt/month
c. Big Macs 2.89 1.00 3 per week 6 per week
d. Cooked shrimp $9/ lb $12/lb 2 lb/month 1.5 lb/ month
The midpoint formula is the most accurate method of calculating price elasticity of demand. This solution shows a sample calculation.