Suppose that 50 candy bars are demanded at a particular price. If the price of candy bars rises by 4 percent, the number of candy bars demanded falls to 46 candy bars. According to the midpoint method, what does this mean? a. The demand for candy bars in

The correct answer is (b) The demand for candy bars in this price range is inelastic. Explanation: The midpoint method is used to calculate the price elasticity of demand. It is calculated as: Price elasticity of demand = ((Q2 – Q1)/((Q2 + Q1)/2))/((P2 – P1)/((P2 + P1)/2)) where Q1 and Q2 are the quantities demanded before and after the price change, and P1 and P2 are the prices before and after the change. Using the given information, we can calculate the price elasticity of demand as: Price elasticity of demand = ((46-50)/((46+50)/2))/((4)/((4+0)/2)) = -1 Since the value of price elasticity of demand is less than 1, it means that the demand for candy bars is inelastic. In other words, a change in price has a relatively small effect on the quantity demanded. This suggests that candy bars are a necessity or have few substitutes.