Answer
c. 2.
Work Step by Step
Given that,
Price change from \$8 to \$12 brought down the quantity demanded from 110 to 90 units.
At Midpoint,
Price = \$10 & Quantity demanded =100 units
Using the Midpoint method,
Price elasticity of demand for the given good ( negative sign as the change in price and quantity are in opposite directions)
= - (Q2-Q1) / [(Q2+Q1)/2] $\div $ (P2-P1) / [(P2+P1) / 2]
= - (\$12 - \$8) / [(\$12+\$8)/2] $\div$ (110-90) / [(110+90)/2]
= - (\$4 / \$10) $\div$ (-20/100)
= 2
