Asked by Mileka Lawson on Jun 03, 2024
Verified
Refer to Figure 5-7. Using the midpoint method, what is the price elasticity of supply between point B and point C?
A) 1.44
B) 1.29
C) 0.96
D) 0.69
Price Elasticity of Supply
An indicator of the extent to which the supply of a product reacts to a shift in its price.
Midpoint Method
A technique utilized in economics to calculate the percentage change between two values, minimizing the distortion from the choice of base value by using the average of the initial and final values as the base.
- Comprehend the principle of price elasticity of supply and its influencing factors.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
A
Explanation :
The midpoint method for calculating elasticity is given by the formula [(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)], where Q1 and Q2 are the initial and final quantities, and P1 and P2 are the initial and final prices, respectively. Without the specific values from Figure 5-7, the correct answer can't be determined directly from the question. However, given the options and assuming the calculation has been done correctly, an elasticity of 1.44 indicates a relatively elastic supply between points B and C, meaning the percentage change in quantity supplied is greater than the percentage change in price.
Learning Objectives
- Comprehend the principle of price elasticity of supply and its influencing factors.