Figure 5-2
-Refer to Figure 5-2.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 5-2 
-Refer to Figure 5-2.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

Using the midpoint method, we calculate the price elasticity of supply as:
(ΔQ/((Q1+Q2)/2))/ (ΔP/((P1+P2)/2))
= ((20-10)/((20+10)/2))/((5-4)/((5+4)/2))
= (10/15)/ (1/4.5)
= 0.6667/0.2222
= 3
Since the price elasticity of supply is greater than 1, it is elastic. Therefore, the answer is C) 1.80.

Figure 5-2 -Refer to Figure 5-2.Using the Midpoint Method,what Is the Price