Suppose that an increase in the price of carrots from $1.50 to $1.70 per kilogram raises the amount of carrots that carrot farmers produce from 1.2 million kilograms to 1.6 million kilograms.Using the midpoint method,what would be the elasticity of supply
A)0.50
B)0.54
C)1.86
D)2.28

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated using the midpoint method: [(Q2 - Q1) / ((Q2 + Q1) / 2)] / [(P2 - P1) / ((P2 + P1) / 2)]. Substituting the given values: [(1.6 - 1.2) / (1.6 + 1.2) / 2] / [(1.7 - 1.5) / (1.7 + 1.5) / 2] = 0.2857 / 0.1176 = 2.28.

Suppose That an Increase in the Price of Carrots from $1.50