The following figure depicts the supply curve of a certain firm.

-Refer to the figure above.If the elasticity of supply is 0.5 when the quantity changes from 100 to 150,what is the price at the quantity 100?

Question

The following figure depicts the supply curve of a certain firm.
 
-Refer to the figure above.If the elasticity of supply is 0.5 when the quantity changes from 100 to 150,what is the price at the quantity 100?

Quizplus · Accepted Answer

The elasticity of supply is given by the formula % change in quantity supplied / % change in price. In this case, we know that the elasticity is 0.5, and we can calculate the % change in quantity supplied as (150-100)/100 = 0.5 or 50%. We can then use this to solve for the % change in price:

0.5 = 50% / % change in price
% change in price = 100%

This means that a 100% increase in price leads to a 50% increase in quantity supplied, which is consistent with a supply curve that has a relatively low elasticity.

To find the price at a quantity of 100, we can simply trace a vertical line up from the quantity of 100 until we hit the supply curve. This gives us a price of $5, which is the correct answer.

The Following Figure Depicts the Supply Curve of a Certain