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Andrew [12]
3 years ago
15

Suppose for a particular good that when the price rises from $25 to $35 that the quantity supplied rises from 1,000 units to 1,4

00 units. using the midpoint method, the price elasticity of supply is
Business
1 answer:
Strike441 [17]3 years ago
8 0
Given:

Q0 = 1000 units
Q1 = 1400 units
P0 = $25
P1 = $35

Required:

Price elasticity of Supply =?

Solution:

The price of elasticity of supply is a ratio between the change in quantity demand and the change in pricing. Thus, it can be calculated as:

Price of elasticity of Supply = (Q1-Q0)/((Q1+Q0)/2) ÷ (P1-P0)/((P1+P0)/2)

Subsituting values,

Price of elasticity of Supply = (1400-1000)/((1400+1000)/2) ÷ (35-25)/((35+25)/2)

Price of elasticity of Supply = 1
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