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
A) 0.62,and supply is elastic.
B) 0.62,and supply is inelastic.
C) 1.63,and supply is elastic.
D) 1.63,and supply is inelastic.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated using the midpoint method: [(1100 - 500) / ((1100 + 500) / 2)] / [(0.80 - 0.50) / ((0.80 + 0.50) / 2)] = 1.63. Since the elasticity is greater than 1, supply is elastic.

A Bakery Would Be Willing to Supply 500 Bagels Per