Question

When the price of a candy bar is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for candy bars is
a. inelastic
b. elastic
c. unit elastic
d. perfectly inelastic

Answer 1

Using the midpoint method, we know that the demand for candy bars is a. inelastic.

Explanation:

The demand is said to be inelastic when the demand for the goods and services does not change with the change in price.

When the price of the product increases and there is no reduction in the demand of the product is known as inelastic demand. The demand tends to be inelastic for the daily use and necessary goods and services.

Elasticity can be computed with the help of the midpoint method as it gives the result regardless of the direction of change.