Question 1

Figure 5-13
 
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $100 and $220?

Accepted Answer

The midpoint method for calculating elasticity is:(Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2)Plugging in the values from the graph, we get:(10 - 6) / ((10 + 6) / 2) / (220 - 100) / ((220 + 100) / 2) = 0.58

Question 2

Figure 5-14
 
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points A and B?

Accepted Answer

The midpoint method for calculating elasticity is:Es = (%ΔQ / %ΔP) * (Q1 + Q2) / (P1 + P2)Plugging in the values from points A and B, we get:Es = ((100 - 50) / (100 - 50)) * (50 + 100) / (100 + 50) = 2.33

Question 3

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

Using the midpoint method, the percentage change in quantity supplied is:

[(175-150)/((175+150)/2)]*100% = 15.38%

The percentage change in price is:

[(1.50-1.25)/((1.50+1.25)/2)]*100% = 16.67%

The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price:

15.38%/16.67% = 0.923

Since the question asks for the absolute value of the elasticity, the answer is 0.923, which is closest to 0.85 (choice C).

Question 4

Figure 5-13
 
-Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?

Accepted Answer

The supply curve is most elastic when the slope is the most flat, meaning a small change in price leads to a large change in quantity supplied. In this figure, we can see that the slope of the curve is the flattest in the range of $16 to $40, which indicates the supply is the most elastic in this price range.

Question 5

Figure 5-13
 
-Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?

Accepted Answer

The supply curve is least elastic over the range where the percentage change in quantity supplied is smallest relative to the percentage change in price. Typically, this occurs at higher price levels where the curve becomes steeper, as seen in the range from $220 to $430.

Question 6

In January the price of widgets was $1.00,and Wendy's Widgets produced 80 widgets.In February the price of widgets was $1.50,and Wendy's Widgets produced 110 widgets.In March the price of widgets was $2.00,and Wendy's Widgets produced 140 widgets.The price elasticity of supply of Wendy's Widgets was about

Accepted Answer

The answer of In January the price of widgets was...

Question 7

Figure 5-15
 
-Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

Accepted Answer

Using the midpoint method, the price elasticity of supply between $6 and $8 is:
[(40-30)/(40+30)/2] / [(8-6)/(8+6)/2] = 1.17. Therefore, the correct answer is C.

Question 8

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

Using the midpoint method formula:

Price elasticity of supply = % change in quantity supplied / % change in price

% change in quantity supplied = (170-150) / [(170+150)/2] = 20/160 = 0.125

% change in price = (1.40-1.20) / [(1.40+1.20)/2] = 0.2/1.3 = 0.153

Price elasticity of supply = 0.125/0.153 = 0.81

Therefore, the price elasticity of supply is 0.81, which is closest to choice D (0.81).

Question 9

Figure 5-14
 
-Refer to Figure 5-14.Along which of these segments of the supply curve is supply least elastic?

Accepted Answer

Along segment GH, the change in quantity supplied is relatively small compared to the change in price, indicating that supply is relatively inelastic.

Question 10

Figure 5-14
 
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points C and D?

Accepted Answer

The midpoint method for calculating elasticity is:Es = (Q2 - Q1) / (P2 - P1) * (P2 + P1) / (Q2 + Q1)Plugging in the values from points C and D, we get:Es = (100 - 50) / (20 - 10) * (20 + 10) / (100 + 50) = 0.73

Question 11

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

Accepted Answer

Using the midpoint method, we have:

% change in quantity supplied = ((170-150)/((170+150)/2)) x 100% = 13.33%
% change in price = (($1.50-$1.30)/(($1.50+$1.30)/2)) x 100% = 13.33%

Therefore, the price elasticity of supply is:

% change in quantity supplied / % change in price = 13.33% / 13.33% = 1

Since the price elasticity of supply is greater than 0 and equal to 1, we can conclude that the supply of apples from this orchard is unit elastic.

Question 12

Figure 5-14
 
-Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

Accepted Answer

The answer of Figure 5-14
 
-Refer to Figure 5-14.Along which...

Question 13

Figure 5-14
 
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points D and G?

Accepted Answer

The answer of Figure 5-14
 
-Refer to Figure 5-14.Using the...

Question 14

A bakery would be willing to supply 500 donuts per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 donuts.Using the midpoint method,the price elasticity of supply for donuts is about

Accepted Answer

Using the midpoint method to calculate the price elasticity of supply:

%ΔQs = [(1100-500)/((1100+500)/2)]*100 = 57.14%
%ΔP = [(0.80-0.50)/((0.80+0.50)/2)]*100 = 37.5%

Elasticity of supply = %ΔQs / %ΔP = 57.14% / 37.5% = 1.52

Since the elasticity of supply is greater than 1, supply is elastic. However, we need to round the result to one decimal point, so the final answer is:

Choice C) 1.6, and supply is elastic.

Question 15

Figure 5-14
 
-Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points B and C?

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.

Question 16

In January the price of dark chocolate candy bars was $2.00,and Willy's Chocolate Factory produced 80 pounds.In February the price of dark chocolate candy bars was $2.50,and Willy's produced 110 pounds.In March the price of dark chocolate candy bars was $3.00,and Willy's produced 140 pounds.The price elasticity of supply of Willy's dark chocolate candy bars was about

Accepted Answer

To calculate the price elasticity of supply we use the formula:
% change in quantity supplied / % change in price

When the price increased from $2.00 to $2.50, the percentage change in price is (2.50-2.00)/2.00 = 0.25 or 25%, and the percentage change in quantity supplied is (110-80)/80 = 0.375 or 37.5%. Therefore, the price elasticity of supply is 0.375/0.25 = 1.5.

When the price increased from $2.50 to $3.00, the percentage change in price is (3.00-2.50)/2.50 = 0.20 or 20%, and the percentage change in quantity supplied is (140-110)/110 = 0.2727 or 27.27%. Therefore, the price elasticity of supply is 0.2727/0.20 = 1.36.

The average of these two elasticity values is (1.5+1.36)/2 = 1.42, which is closest to answer choice (C).

Question 17

Figure 5-16
 
-Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between point A and point B?

Accepted Answer

The answer of Figure 5-16
 
-Refer to Figure 5-16.Using the...

Question 18

Figure 5-13
 
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

Accepted Answer

The midpoint method calculates the price elasticity of supply as the percentage change in quantity supplied divided by the percentage change in price. Between $16 and $40, the percentage change in price is (40-16)/((40+16)/2) = 1.5, and the percentage change in quantity supplied is the same, making the elasticity 1.0.

Question 19

Figure 5-15
 
-Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $4 and $6?

Accepted Answer

The midpoint method for calculating price elasticity of supply is:(Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2)Plugging in the values from the graph, we get:(10 - 8) / ((10 + 8) / 2) / (6 - 4) / ((6 + 4) / 2) = 1.25

Question 20

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about

Accepted Answer

The answer of A bakery would be willing to supply...

Quiz 5: Elasticity and Its Application

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $100 and $220?

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points A and B?

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?

Figure 5-15 -Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $6 and $8?

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply least elastic?

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points C and D?

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

Figure 5-14 -Refer to Figure 5-14.Along which of these segments of the supply curve is supply most elastic?

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points D and G?

A bakery would be willing to supply 500 donuts per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 donuts.Using the midpoint method,the price elasticity of supply for donuts is about

Figure 5-14 -Refer to Figure 5-14.Using the midpoint method,what is the price elasticity of supply between points B and C?

Figure 5-16 -Refer to Figure 5-16.Using the midpoint method,what is the price elasticity of supply between point A and point B?

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

Figure 5-15 -Refer to Figure 5-15.Using the midpoint method,what is the price elasticity of supply between $4 and $6?

A bakery would be willing to supply 500 bagels per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 bagels.Using the midpoint method,the price elasticity of supply for bagels is about