Jess owns a sandwich shop. the price of a sandwich recently increased from $5 to $7. jess responded by increasing the quantity of sandwiches she supplied from 70 to 90 per day. using the midpoint method, jess's price elasticity of supply is equal to
a. 4 00.
b. 0.75.
c. 1.33.
d. 3.00.
e. 1.50.
Answer: b. 0.75.
Price elasticity = (Change in quantity supplied / Average quantity supplied) / (Change in price / Average price)
= [(90 - 70) / (90 + 70) / 2] / [$(7 - 5) / $(7 + 5) / 2]
= [20 / (160 / 2) / [2 / (12 / 2)]
= (20 / 80) / (2 / 6)
= (1/4) / (1/3)
= 0.75
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