The price elasticity of demand using the mid-point method is -1.25.
Price elasticity of demand for a good is a measure of the sensitivity of quantity demanded to the price of that good. As prices rise, quantity demanded falls for most goods, but falls more for some. Price elasticity provides the percentage change in quantity demanded a 1% increase in price, keeping everything else constant. If the elasticity is −2, it means that a 1% increase in price leads to a 2% decrease in quantity demanded. Other elasticities measure how quantity demanded changes with other variables.
Price elasticity is negative except in special cases. If we say that good has an elasticity of 2, that almost always means that the good has an elasticity of −2 by the formal definition. The expression "more elastic" means that the elasticity of the goods is greater than that, ignoring the sign. Veblen and Giffen's goods are two goods with positive elasticity, with rare exceptions to the law of demand.
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