1. What is the Midpoint Formula?

The midpoint formula calculates the exact middle point between two price-quantity combinations on a demand or supply curve. It's particularly useful for calculating price elasticity of demand while avoiding directionality bias.

2. How Does the Calculator Work?

The calculator uses the midpoint formula:

Where:

• \( P1 \) — Initial price
• \( P2 \) — New price
• \( Q1 \) — Initial quantity
• \( Q2 \) — New quantity

Explanation: The formula simply averages the two prices and two quantities to find the midpoint between them.

3. Importance in Microeconomics

Details: The midpoint is crucial for calculating arc elasticity, which measures responsiveness of quantity demanded to price changes between two points on a curve.

4. Using the Calculator

Tips: Enter both price points in dollars and both quantity points. The calculator will output the midpoint in (price, quantity) format.

5. Frequently Asked Questions (FAQ)

Q1: Why use midpoint instead of simple percentage change?
A: The midpoint formula gives the same result regardless of direction of change (price increase vs decrease), making it more reliable for elasticity calculations.

Q2: Can this be used for supply elasticity too?
A: Yes, the midpoint formula works equally well for demand and supply elasticity calculations.

Q3: What units should I use?
A: Prices should be in consistent dollar amounts, quantities in consistent units. The specific units don't matter as long as they're consistent.

Q4: How precise should my inputs be?
A: Use as many decimal places as your data warrants. The calculator handles up to 4 decimal places for prices.

Q5: What's the difference between point and midpoint elasticity?
A: Point elasticity measures at a single point, while midpoint (arc) elasticity measures between two points using their average as the base.