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) 0.84
C) 0.61
D) 1.67

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) 0.84 
C) 0.61 
D) 1.67

Quizplus · Accepted Answer

Using the midpoint method, the price elasticity of supply is calculated as:
Eps = [(Q2 - Q1)/((Q1 + Q2)/2)]/[(P2 - P1)/((P1 + P2)/2)]
Between points B and C, we have:
(Q2 - Q1)/((Q1 + Q2)/2) = (16 - 12)/[(12 + 16)/2] = 0.4
(P2 - P1)/((P1 + P2)/2) = (30 - 20)/[(20 + 30)/2] = 0.4
Eps = 0.4/0.48 = 0.83
Therefore, the price elasticity of supply between points B and C is approximately 0.84. Option B is the correct answer.

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