Price elasticity of demand = -1.909

Demand is elastic

Explanation:

Using midpoint formula;

Price elasticity of demand = percentage change in quantity demanded/ percentage change in price

Percentage change in quantity demanded = {(Q2- Q1)/ [Q1+ Q2]/ 2} * 100

Percentage change in price = {(P2- P1)/ [P1+ P2]/ 2} * 100

Q1= 5

When Q = 5

P1= 48 - 3 (5)

= 33

Q2= 6

When Q = 6

P2= 48 - 3 (6)

= 30

Percentage change in quantity demanded = {(6 - 5)/ [5 + 6]/ 2} * 100

= (1/ 5.5) * 100

= 18.1818%

Percentage change in price = {(30 - 33)/ [33 + 30]/ 2} * 100

= (-3/ 31.50) * 100

= -9.5238%

Price elasticity of demand = 18.1818/ -9.5238

= -1.909

Demand is elastic because, in absolute terms, the price elasticity of demand is greater than 1. This shows that a 1% increase in price decreases the quantity demanded by 1.909%

If midpoint method was not used here, would the conclusion change?