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Y-AXIS: In a graph, this is one of two lines that intersect at a right angle. This is the "vertical axis" that runs up and down.

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Lesson 11: Elasticity Basics | Unit 3: Measurement Page: 14 of 25

Topic: Doing The Numbers: Midpoint <=PAGE BACK | PAGE NEXT=>

  • Our task is to calculate the price elasticity of demand using the midpoint formula.

    midpoint
    elasticity
    =(Q2 - Q1)
    (Q2 + Q1)/2
    ÷(P2 - P1)
    (P2 + P1)/2

  • The values for this formula are P1 = $2.49, Q1 = 5,447 tacos, P2 = $1.99, Q2 = 6,608 tacos.
    midpoint
    elasticity
    =0.19 ÷ - 0.22=- 0.86

  • This value - 0.86 indicates that the a one percent decline in the price of Tacos results in a 0.86 percent increase in quantity demanded.

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MONOPOLISTIC COMPETITION, ADVERTISING

Advertising is commonly used by firms operating under monopolistic competition as a way to create product differentiation and thus to acquire some degree of market control and thus charge a higher price.

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Today, you are likely to spend a great deal of time searching the newspaper want ads looking to buy either a three-hole paper punch or decorative picture frames. Be on the lookout for jovial bank tellers.
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
"Think not of yourself as the architect of your career but as the sculptor. Expect to have to do a lot of hard hammering and chiseling and scraping and polishing. "

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