Question 1

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 about
A) 0.62.
B) 0.77.
C) 1.24.
D) 1.63.

Accepted Answer

The answer of A bakery would be willing to supply...

Question 2

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about
A) 0.45
B) 0.90
C) 1.11
D) 2.20

Accepted Answer

The answer of At a price of $1.00,a local coffee...

Question 3

Figure 5-13 
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $100 and $220?
A) 0.58
B) 0.67
C) 1.00
D) 1.73

Accepted Answer

The answer of Figure 5-13 
-Refer to Figure 5-13.Using the...

Question 4

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?
A) 0.67
B) 0.89
C) 1.00
D) 1.13

Accepted Answer

The midpoint method formula for price elasticity of supply is:

% change in quantity supplied = [(Q2 - Q1) / ((Q1 + Q2)/2)] x 100%
% change in price = [(P2 - P1) / ((P1 + P2)/2)] x 100%

Using the given values, we get:

% change in quantity supplied = [(1.6 - 1.2) / ((1.2 + 1.6)/2)] x 100% = 33.33%
% change in price = [(1.8 - 1.3) / ((1.3 + 1.8)/2)] x 100% = 38.46%

Therefore, the price elasticity of supply is:

|Elasticity| = % change in quantity supplied / % change in price

|Elasticity| = 33.33% / 38.46% ≈ 0.867 ≈ 0.89 (rounded to two decimal places)

Since elasticity is always positive, we can ignore the absolute value sign and round the answer to 0.89. This suggests that the supply of melons is relatively elastic, meaning that producers are relatively responsive to changes in price.

Question 5

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about
A) 0.45.
B) 2.0.
C) 2.2.
D) 200.

Accepted Answer

Using the midpoint method, the formula for price elasticity of supply is:

Price Elasticity of Supply = [(Q2 - Q1) / (Q2 + Q1) / 2] / [(P2 - P1) / (P2 + P1) / 2]

Where:
Q1 = 400 units
Q2 = 600 units
P1 = $10
P2 = $12

Plugging in the values, we get:

Price Elasticity of Supply = [(600 - 400) / ((600 + 400) / 2)] / [($12 - $10) / (($12 + $10) / 2)]
= [200 / 500] / [$2 / $11]
= 0.4 / 0.1818
= 2.2

Therefore, the price elasticity of supply is about 2.2, and the correct choice is (C).

Question 6

At a price of $1.20,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.40,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about
A) 0.15
B) 0.375
C) 2.5
D) 2.60

Accepted Answer

Using the midpoint method, we get:

% change in quantity supplied = (150-100)/((150+100)/2) x 100% = 33.33%

% change in price = (1.40-1.20)/((1.40+1.20)/2) x 100% = 16.67%

Price elasticity of supply = % change in quantity supplied / % change in price

= 33.33% / 16.67%

= 2

Therefore, the price elasticity of supply is 2.60, which is closest to answer choice D.

Question 7

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is
A) inelastic,since the price elasticity of supply is equal to .91.
B) inelastic,since the price elasticity of supply is equal to 1.1.
C) elastic,since the price elasticity of supply is equal to 0.91.
D) elastic,since the price elasticity of supply is equal to 1.1.

Accepted Answer

The answer of Holding all other factors constant and using...

Question 8

A bakery would be willing to supply 500 donuts per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 donuts.Using the midpoint method,the price elasticity of supply for donuts is about
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.

Accepted Answer

Using the midpoint method, the price elasticity of supply can be calculated as:

Elasticity of Supply = (% Change in Quantity Supplied)/(% Change in Price)

% Change in Quantity Supplied = [(1100-500)/800]/((1100+500)/2) = 0.5

% Change in Price = [(0.8-0.5)/0.65]/((0.8+0.5)/2) = 0.6154

Elasticity of Supply = 0.5/0.6154 = 0.8125 (rounded to two decimal places)

Since elasticity of supply is greater than 1, the supply is elastic. Therefore, the correct choice is C.

Question 9

Figure 5-13 
-Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?
A) $16 to $40
B) $40 to $100
C) $100 to $220
D) $220 to $430

Accepted Answer

The supply curve is most elastic when the slope is the most flat, meaning a small change in price leads to a large change in quantity supplied. In this figure, we can see that the slope of the curve is the flattest in the range of $16 to $40, which indicates the supply is the most elastic in this price range.

Question 10

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about
A) 1.14.
B) 1.00.
C) 0.875.
D) 0.50.

Accepted Answer

Using the midpoint method, we have:

% change in quantity supplied = ((170-150)/((170+150)/2)) x 100% = 13.33%
% change in price = (($1.50-$1.30)/(($1.50+$1.30)/2)) x 100% = 13.33%

Therefore, the price elasticity of supply is:

% change in quantity supplied / % change in price = 13.33% / 13.33% = 1

Since the price elasticity of supply is greater than 0 and equal to 1, we can conclude that the supply of apples from this orchard is unit elastic.

Question 11

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about
A) 2.0.
B) 1.23.
C) 1.00.
D) 0.81.

Accepted Answer

Using the midpoint method formula:

Price elasticity of supply = % change in quantity supplied / % change in price

% change in quantity supplied = (170-150) / [(170+150)/2] = 20/160 = 0.125

% change in price = (1.40-1.20) / [(1.40+1.20)/2] = 0.2/1.3 = 0.153

Price elasticity of supply = 0.125/0.153 = 0.81

Therefore, the price elasticity of supply is 0.81, which is closest to choice D (0.81).

Question 12

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is
A) elastic,and the price elasticity of supply is 1.74.
B) elastic,and the price elasticity of supply is 0.57.
C) inelastic,and the price elasticity of supply is 1.74.
D) inelastic,and the price elasticity of supply is 0.57.

Accepted Answer

The answer of An increase in the price of cheese...

Question 13

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00)and another point is (quantity supplied = 250,price = $2.50).Using the midpoint method,the price elasticity of supply is about
A) 0.2.
B) 0.5.
C) 1.0.
D) 2.5.

Accepted Answer

The answer of On a certain supply curve,one point is...

Question 14

On a certain supply curve,one point is (quantity supplied = 200,price = $4.00)and another point is (quantity supplied = 250,price = $4.50).Using the midpoint method,the price elasticity of supply is about
A) 0.22.
B) 0.53.
C) 1.00.
D) 1.89.

Accepted Answer

The answer of On a certain supply curve,one point is...

Question 15

Figure 5-13 
-Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?
A) $16 to $40
B) $40 to $100
C) $100 to $220
D) $220 to $430

Accepted Answer

The answer of Figure 5-13 
-Refer to Figure 5-13.Over which...

Question 16

Holding all other factors constant and using the midpoint method,if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60,then supply is
A) inelastic,since the price elasticity of supply is equal to .91.
B) inelastic,since the price elasticity of supply is equal to 1.1.
C) elastic,since the price elasticity of supply is equal to 0.91.
D) elastic,since the price elasticity of supply is equal to 1.1.

Accepted Answer

The answer of Holding all other factors constant and using...

Question 17

Figure 5-13 
-Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?
A) 0.125
B) 0.86
C) 1.0
D) 2.5

Accepted Answer

The answer of Figure 5-13 
-Refer to Figure 5-13.Using the...

Question 18

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about
A) 1.18.
B) 1.00.
C) 0.85.
D) 0.25.

Accepted Answer

Using the midpoint method, we have:

% change in quantity supplied = [(175-150)/((175+150)/2)] x 100% = 14.29%
% change in price = [(1.50-1.25)/((1.50+1.25)/2)] x 100% = 16.67%
Price elasticity of supply = % change in quantity supplied / % change in price = 14.29% / 16.67% = 0.857
Therefore, the price elasticity of supply is about 0.857 or 0.85 (rounded to two decimal places). The best choice is C.

Question 19

In January the price of widgets was $1.00,and Wendy's Widgets produced 80 widgets.In February the price of widgets was $1.50,and Wendy's Widgets produced 110 widgets.In March the price of widgets was $2.00,and Wendy's Widgets produced 140 widgets.The price elasticity of supply of Wendy's Widgets was about
A) 0.79 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.
B) 1.27 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
C) 0.79 when the price increased from $1.00 to $1.50 and 1.19 when the price increased from $1.50 to $2.00.
D) 1.27 when the price increased from $1.00 to $1.50 and 0.84 when the price increased from $1.50 to $2.00.

Accepted Answer

The answer of In January the price of widgets was...

Question 20

In January the price of dark chocolate candy bars was $2.00,and Willy's Chocolate Factory produced 80 pounds.In February the price of dark chocolate candy bars was $2.50,and Willy's produced 110 pounds.In March the price of dark chocolate candy bars was $3.00,and Willy's produced 140 pounds.The price elasticity of supply of Willy's dark chocolate candy bars was about
A) 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00.
B) 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00.
C) 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00.
D) 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.

Accepted Answer

To calculate the price elasticity of supply of Willy's dark chocolate candy bars, we first need to calculate the percentage change in quantity supplied and the percentage change in price for each given price change. Using the midpoint formula, we get:

- From $2.00 to $2.50: 
Percentage change in quantity supplied = ((110-80)/((110+80)/2)) x 100% = 36.36%
Percentage change in price = ((2.50-2.00)/((2.50+2.00)/2)) x 100% = 20%
Price elasticity of supply = 36.36% / 20% = 1.82

- From $2.50 to $3.00:
Percentage change in quantity supplied = ((140-110)/((140+110)/2)) x 100% = 30%
Percentage change in price = ((3.00-2.50)/((3.00+2.50)/2)) x 100% = 20%
Price elasticity of supply = 30% / 20% = 1.5

Taking the average of the two price elasticities of supply, we get:
(1.82 + 1.5) / 2 ≈ 1.42

Therefore, the best choice is C.

Quiz 5: Elasticity and Its Application

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 about

At a price of $1.00,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.20,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $100 and $220?

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?

A manufacturer produces 400 units when the market price of $10 per unit and produces 600 units when the market price is $12 per unit.Using the midpoint method,for this range of prices,the price elasticity of supply is about

At a price of $1.20,a local coffee shop is willing to supply 100 cinnamon rolls per day.At a price of $1.40,the coffee shop would be willing to supply 150 cinnamon rolls per day.Using the midpoint method,the price elasticity of supply is about

Holding all other factors constant and using the midpoint method,if a calculator manufacturer increases production from 40 to 50 units when price increases by 20 percent,then supply is

A bakery would be willing to supply 500 donuts per day at a price of $0.50 each.At a price of $0.80,the bakery would be willing to supply 1,100 donuts.Using the midpoint method,the price elasticity of supply for donuts is about

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the most elastic?

At price of $1.30 per pound,a local apple orchard is willing to supply 150 pounds of apples per day.At a price of $1.50 per pound,the orchard is willing to supply 170 pounds of apples per day.Using the midpoint method,the price elasticity of supply is about

At price of $1.20,a local pencil manufacturer is willing to supply 150 boxes per day.At a price of $1.40,the manufacturer is willing to supply 170 boxes per day.Using the midpoint method,the price elasticity of supply is about

An increase in the price of cheese crackers from $2.25 to $2.45 per box causes suppliers of cheese crackers to increase their quantity supplied from 125 boxes per minute to 145 boxes per minute.Using the midpoint method,supply is

On a certain supply curve,one point is (quantity supplied = 200,price = $2.00) and another point is (quantity supplied = 250,price = $2.50) .Using the midpoint method,the price elasticity of supply is about

On a certain supply curve,one point is (quantity supplied = 200,price = $4.00) and another point is (quantity supplied = 250,price = $4.50) .Using the midpoint method,the price elasticity of supply is about

Figure 5-13 -Refer to Figure 5-13.Over which range is the supply curve in this figure the least elastic?

Holding all other factors constant and using the midpoint method,if a candy manufacturer increases production by 20 percent when the market price of candy increases from $0.50 to $0.60,then supply is

Figure 5-13 -Refer to Figure 5-13.Using the midpoint method,what is the price elasticity of supply between $16 and $40?

At price of $1.25,a paper manufacturer is willing to supply 150 spiral notebooks per day.At a price of $1.50,the paper manufacturer is willing to supply 175 spiral notebooks per day.Using the midpoint method,the price elasticity of supply is about