When the price of a product increases from $35 to $45,the quantity supplied increases from 30 units to 40 units per week.Using the midpoint method,the price elasticity of supply is
A) 0.00.
B) -1.1.
C) 1.14.
D) 1.35.
E) 0.88.

Question

Quizplus · Accepted Answer

The midpoint formula is:
Elasticity of supply=(%change in quantity supplied/%change in price)=((Q2-Q1)/((Q2+Q1)/2))/((P2-P1)/((P2+P1)/2))

Using the given values:
Elasticity of supply=((40-30)/((40+30)/2))/((45-35)/((45+35)/2))
=((10/35)*((2/3)/(10/8)))
=1.14

Therefore, the price elasticity of supply is 1.14, indicating that the supply is relatively elastic.

When the Price of a Product Increases from $35 to $45,the