Question
On a certain supply curve on point is quantity supplied =200 price= R4.00 and another point is quantity supplied =250 price =R 4.50 using the midpoint method the price elasticity of supply is about?
Answers
GPT 3.5
To calculate the price elasticity of supply using the midpoint method, the formula is:
Price elasticity of supply = [(change in quantity supplied / average quantity supplied) / (change in price / average price)]
Firstly, calculate the change in quantity supplied:
Change in quantity supplied = 250 - 200 = 50
Next, calculate the average quantity supplied:
Average quantity supplied = (200 + 250) / 2 = 225
Then, calculate the change in price:
Change in price = R4.50 - R4.00 = R0.50
Lastly, calculate the average price:
Average price = (R4.00 + R4.50) / 2 = R4.25
Now plug the values into the formula:
Price elasticity of supply = [(50 / 225) / (R0.50 / R4.25)]
Price elasticity of supply = (0.2222) / (0.1176)
Price elasticity of supply ≈ 1.889
Therefore, the price elasticity of supply using the midpoint method is approximately 1.889.
Price elasticity of supply = [(change in quantity supplied / average quantity supplied) / (change in price / average price)]
Firstly, calculate the change in quantity supplied:
Change in quantity supplied = 250 - 200 = 50
Next, calculate the average quantity supplied:
Average quantity supplied = (200 + 250) / 2 = 225
Then, calculate the change in price:
Change in price = R4.50 - R4.00 = R0.50
Lastly, calculate the average price:
Average price = (R4.00 + R4.50) / 2 = R4.25
Now plug the values into the formula:
Price elasticity of supply = [(50 / 225) / (R0.50 / R4.25)]
Price elasticity of supply = (0.2222) / (0.1176)
Price elasticity of supply ≈ 1.889
Therefore, the price elasticity of supply using the midpoint method is approximately 1.889.