Last week, michelle spent $ 30 on caviar. today, michelle still spends $ 30 on caviar even though its price has doubled. what is michelle's price elasticity of demand for caviar? (use the midpoint formula for your calculation.)

Elasticity of demand will be 1

Explanation:

Let the original price = $1

So goods purchased ( As Michelle spent $30 on caviar )

Now price is doubled so new price = $2

So good purchased

So change in value of quantity = 30 - 15 = 15

Average value of quantity

Ratio of change in quantity to average quantity

Change in price = $2-$1 = $1

Average price

So ratio of change in price to average price

Elasticity of demand is given by =\frac{Ratio\  of\  change\  in\  quantity \ to \ average \ quantity}{ ratio \ of\  change \ in \ price \ to average \ price}=\frac{0.666}{0.666}=1

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