Calculating Elasticity and Percentage Changes

Read this article on how to estimate elasticity. Make sure to answer the "Try It" questions.

Try It

Question 1

Suppose a veggie burger goes up in price from $6 to $9. The percentage change or growth rate in price is ________.

    • 6/9 or 67%
    • 3/9 or 33%
    • 3/6 or 50%

Question 2

Although slightly more complicated to calculate, one reason the midpoint (arc) elasticity approach is considered more accurate is that it

    • assumes the profit does not change with a price increase.
    • give the same answer regardless of which price and which quantity should be in the denominator.
    • allows only elasticity values that are higher than 1.0.