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.

Question

Quizplus · 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.

At Price of $1