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Answer to Question #72947 in Microeconomics for PAMELA

Question #72947
If the supply equation is given as Q=-200+10P, the price elasticity of supply between R40 and R50, calculated using the arc elasticity of demand, is?
Expert's answer
Arc elasticity of demand is ((Q2 – Q1)/midpoint Q)/((P2 – P1)/midpoint P)
Q1=-200+10P = 40, P=24
Q2=-200+10P = 50, P=25
Arc elasticity of demand = ((50-40)/45)/((25-24)/24,5)=5.44

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Comments

Assignment Expert
05.02.18, 17:43

Dear Pamela, calculation is right. So, we should choose the closest option c) 0.56

Pamela
03.02.18, 16:54

thanks, but the options we have are a. 06, b.1.8, c.056 d.2.0

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