Figure 5-14

-Refer to Figure 5-14.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 5-14
 
-Refer to Figure 5-14.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 formula:
(price change %) / (quantity change %)
[(($28 - $23) / (($23 + $28) / 2)) / (($3 - $6) / (($6 + $3) / 2))]
[(5 / ($51/2)) / (-3 / ($9/2))]
(5/25.5) / (-6/4.5) = 0.196 / -1.33 = -0.147
Since we're looking for the absolute value, we get 0.147.
Therefore, the price elasticity of supply between points B and C is 1.19, which indicates that supply is relatively elastic.

Figure 5-14 -Refer to Figure 5-14.Using the Midpoint Method,what Is the Price