Question

Figure 5 Price 9+ 8 + Supply ? 6 B 5 + 4 3- 2 SO 100 150 200 250 300 350 400 + 450 Quantity Refer to Figure 5. Using the midpoint method, what is the price elasticity of supply between point A and point B? a. 0.4 b. 0.6 C. 1.67 d. 2.16

Answer 1

Price elasticity of supply between point A and B(using midpoint method) :

Answer - (c) 1.67

EXPLANATION -
2 00 - 100 اله ۱۸ ((2 o0 +rs 02, (A- و ) 6 - 4 6+ / 2 موکل X pla ما 2 سا = 1067

Price elasticity of supply between point B and point C(using midpoint method) :

Answer : (a) 1.44

EXPLANATION -
Pt || (با) 250 - 200 (250r20/2 7-b (7te22 مي X 13 7 ده 22 73 - های - 1:44

If there were an increase in demand , that caused the equilibrium price to increase from $6 to $7, then producer's total revenue :

Answer - (a) increases.

EXPLANATION - Producers total revenue is also producer surplus. It could be calculated by finding the area of the triangle containing the following points on the graph: 1. The new equilibrium point($7), 2. The point where price is $7 on the y axis and 3. The point where price is $2 on the y axis. Clearly, when an increase in equilibrium price occurs from $6 to $7, the area of the producer's surplus would increase