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suppose the price for an Uber ride in Austin, TX decreases from $15 to $12 causing...

suppose the price for an Uber ride in Austin, TX decreases from $15 to $12 causing the quantity of rides demanded to increase from 1000 to 1600. Using the midpoint method, the price elasticity of demand for an Uber ride is
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Answer #1

Price

Quantity Demanded

$15

1000

$12

1600

Change in Price (∆P) = $3

Change in Price (∆Q) = -600

Using the Mid-point Method

Mid Point Method = (∆Q÷∆P)*(P1+P2) ÷ (Q1+Q2)

Elasticity = (-600÷3)*[(15+12) ÷ (1000+1600)]

Elasticity = (-600÷3)*(27 ÷ 2600)

Elasticity = -2.0769

In absolute value it will be 2.0769

Since Ed> 1 ⇒ demand is elastic

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