Answer to Question #62070 in Microeconomics for Benjamin Logan

Question

1. The Federal Government is in the process of building a National Broadband Network, which will increase the internet upload and download speeds across Australia. An independent cost benefit analysis has been conducted. It was estimated that at a price of $80 per month, demand for a new high speed broadband would be 93% of the market, while at a price of $115 per month, demand would be 67% of the market. It cannot be assumed that the demand curve is linear.

Calculate the midpoint price elasticity of demand for the high speed broadband. Round your answer to the nearest two decimal places, giving a positive value for elasticity.