How would this change using the midpoint method?

The owner of Grand Central Bookstore is looking into the sales of its Health & Fitness magazine section. She finds that her equilibrium is at 800 magazines per month sold at an average price of $4.75 per magazine. When the price of these Health & Fitness magazines rose to $5.00 each, the quantity sold fell to 725 magazines per month, while the quantity supplied to her increased to 900 a month.From the scenario described, answer the questions below. (40 points)

1. Calculate the price elasticity of demand for the Health & Fitness magazines between prices $4.75 and $5.00. Is it elastic or inelastic? How do you know? (10pts)
2. Calculate the price elasticity of supply for the Health & Fitness magazines between prices $4.75 and $5.00. Is it elastic or inelastic? How do you know based on your answer? (10pts)

Step 2: Find the price elasticity of demand

• % change in price =
  • [(5.00 - 4.75)/4.75] * 100 = 5.26%
• % change in quantity demanded =
  • [(725 - 800)/800] * 100 = -9.38%
• elasticity of demand =
  • -9.38/5.26 = - 1.78
• This is an elastic response as the elasticity is greater than 1.
• Note: There always exists a negative relationship between price and quantity demanded, thus, disregarding the negative sign.

Step 3: Find the price elasticity of supply

• % change in price =
  • [(5.00 - 4.75)/4.75] * 100 = 5.26%
• % change in quantity supplied =
  • [900 - 800)/800] * 100 = 12.5%
• elasticity of supply =
  • 12.5/5.26 = 2.38
• This is an elastic response as the elasticity is greater than 1.