Suppose that when price of a good is $1.50,quantity supplied is 15.When price is $2.50,quantity supplied is 25.According to the midpoint formula,the price elasticity of supply is:
A)0.4.
B)0.8.
C)1.
D)1.5.
E)2.

Question

Quizplus · Accepted Answer

The midpoint formula for price elasticity of supply is [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Plugging in the values: [(25 - 15) / (25 + 15) / 2] / [(2.50 - 1.50) / (2.50 + 1.50) / 2] = (10 / 20) / (1 / 2) = 1.

Suppose That When Price of a Good Is $1