When a product's price changes from $26 to $10 and its quantity supplied changes from 200 to 100 units, the price elasticity of supply (using the midpoint method) equals
A) 0.81.
B) 1.50.
C) 0.75.
D) 0.16.

Question

Quizplus · Accepted Answer

The price elasticity of supply using the midpoint method is calculated as the percentage change in quantity supplied divided by the percentage change in price. The percentage change in quantity supplied is ((100 - 200) / ((100 + 200) / 2)) = -0.67, and the percentage change in price is ((10 - 26) / ((10 + 26) / 2)) = -0.857. The elasticity is 0.67 / 0.857 = 0.75.

When a Product's Price Changes from $26 to $10 and Its