83.7110u 1/27/2018 02:51 PM Grad -Print Calculator stion 11 of 11 Incorrect ncor
ID: 1149438 • Letter: 8
Question
83.7110u 1/27/2018 02:51 PM Grad -Print Calculator stion 11 of 11 Incorrect ncorrect Sapling Learning Map Consider two markets. The initial equilibrium for both markets is the same, P $3.50, and Q29.0. When the price is $10.75, the quantity supplied of coffee is 53.0 and the quantity supplied of hot cocoa is 109.00. The demand for both goods is the same (for simplicity of analysis). Use this information to answer the questions below:. Using the midpoint formula, calculate the elasticity of supply for hot cocoa? Please round to two decimal places. Number .88 Supply in the market for coffee is: O O O O less elastic than supply in the market for hot cocoa. the same elasticity as supply in the market for hot cocoa. elasticity. more elastic than supply in the market for hot cocoa Incorrect. The elasticity of supply is percent change in quantity ied There is not enough information to tell which wil has a hgiviocen changd n vn All the information you need is the opening paragraph.Explanation / Answer
The midpoint formula for calculating the price elasticity of demand is
[(New quantity - Old Quantity) / (New Quantity + old Quantity) / 2] / [(New Price - old price ) / (New Price + Old Price) / 2)]
As per the question, the initial equilibrium for both the market is the same P = $3.50, Q = 29.0.
New price for cocoa = $10.75 New Quantity = 109.
putting the value in the formula we get [(109 - 29) /(109+29) /2 ] / [(10.75 - 3.50) / (10.75 +3.50) /2]
= [(90) / (138) / 2 ] / [(7.25) / (14.25) / 2]
= (0.32) / (0.25)
= 1.28.
The elasticity of supply of hot cocoa is 1.28.
Using the elasticity formula we will calculate the price elasticity supply we get [(53 - 29) /(53+29) /2 ] / [(10.75 - 3.50) / (10.75 +3.50) /2]
= [(24 ) / (82) / 2 ] / [(7.25) / (14.25) / 2]
= (0.14) / (0.25)
= 0.56.
So, we can say that the supply in the market of cocoa is more elastic than the supply in the market for coffee. The first option is right.
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