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In the midpoint method, how is the percentage change in price calculated between two points, P1 and P2?
AP2 minus P1, over P2, times 100
BP2 minus P1, over their average, times 100
CP1 minus P2, over their average, times 100
DP2 minus P1, over P1, times 100
Answer & Solution
Correct answer: B. P2 minus P1, over their average, times 100
1. Just as with quantity, the price side of the midpoint method divides by the average of the two price points rather than by either point alone.
2. That gives P2 minus P1, divided by the average of P1 and P2, then multiplied by 100.
3. Dividing by P1 alone or P2 alone, as in options D and A, produces two different answers depending on the direction of the price change.
4. Reversing the numerator to P1 minus P2, as in option C, only changes the sign and does not match the source's formula.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 5 "Elasticity", section 5.1 | Price Elasticity of Demand and Price Elasticity of Supply_
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