If the price of a good decreases from $9 to $6 and the quantity supplied decreases from 1,500 to 1,300,using the midpoint formula the elasticity of supply equals
A) 0.20.
B) 2.80.
C) 0.36.
D) 0.40.
E) 3.20.

Question

Quizplus · Accepted Answer

Using the midpoint formula:

Elasticity of supply = [(1,300-1,500)/((1,300+1,500)/2)] / [(6-9)/((6+9)/2)]

Elasticity of supply = [-200/1400] / [-3/7]

Elasticity of supply = 0.36

Therefore, the best choice is C, 0.36.

If the Price of a Good Decreases from $9 to $6