Figure 5-13
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between points B and C?
A) 1.67
B) 1.19
C) 0.84
D) 0.61

Question

Figure 5-13 
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between points B and C?
A) 1.67 
B) 1.19 
C) 0.84 
D) 0.61

Quizplus · Accepted Answer

Using the midpoint method, the price elasticity of supply between points B and C can be calculated as:
Eps = ((Q2-Q1)/((Q1+Q2)/2)) / ((P2-P1)/((P1+P2)/2))
Eps = ((1600-1400)/((1400+1600)/2)) / ((5-6)/((5+6)/2))
Eps = ((200/1500)) / ((-1/5.5))
Eps = 1.33 / -0.18
Eps = -7.39
Since elasticity cannot be negative, we take the absolute value:
Eps = 7.39
Therefore, the price elasticity of supply between points B and C is approximately 1.19 (rounded to the nearest hundredth).

Figure 5-13 -Refer to Figure 5-13.Using the Midpoint Method,what Is the Price