Figure 5-15
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points B and C?
A) 1.19
B) 1.67
C) 0.84
D) 0.61

Question

Figure 5-15 
-Refer to Figure 5-15. Using the midpoint method, what is the price elasticity of supply between points B and C?
A) 1.19 
B) 1.67 
C) 0.84 
D) 0.61

Quizplus · Accepted Answer

Using the midpoint method formula: Price Elasticity of Supply = (Q2 - Q1) / [(Q2 + Q1) / 2] / (P2 - P1) / [(P2 + P1) / 2]
We can find: 
Q2 = 120 and Q1 = 80, so (Q2 - Q1) = 40
P2 = 15 and P1 = 10, so (P2 - P1) = 5
[(Q2 + Q1) / 2] = 100 and [(P2 + P1) / 2] = 12.5
Therefore, 
Price Elasticity of Supply = (40 / 100) / (5 / 12.5) = 1.67.

Figure 5-15 -Refer to Figure 5-15. Using the Midpoint Method, What Is