Figure 5-18
-Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?
A) 0.50
B) 0.56
C) 1.80
D) 2.00

Question

Figure 5-18 
-Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?
A) 0.50 
B) 0.56 
C) 1.80 
D) 2.00

Quizplus · Accepted Answer

Price elasticity of supply (PES) = (Percentage change in quantity supplied) / (Percentage change in price)

Using the midpoint method:
Percentage change in quantity supplied = ((15 - 21) / ((15 + 21)/2)) x 100% = -28.57%
Percentage change in price = (($5 - $4) / (($5 + $4)/2)) x 100% = 12.50%

PES = (-28.57% / 12.50%) = -2.286
Absolute value of PES = 2.286

Therefore, the price elasticity of supply between $4 and $5 is 2.286, which is closest to option C (1.80).

Figure 5-18 -Refer to Figure 5-18. Using the Midpoint Method, What Is