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Consider two markets: the market for coffee and the market for hot cocoa. The initial equilibrium for both markets is the same, the equilibrium price is $5.50 , and the equilibrium quantity is 37.0 . When the price is $10.75 , the quantity supplied of coffee is 63.0 and the quantity supplied of hot cocoa is 109.0 . For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for hot cocoa. Please round to two decimal places.

Respuesta :

Answer: 1.526

Explanation:

For hot cocoa:

[tex]Elasticity\ of\ supply=\frac{\frac{Change\ in\ quantity}{Average\ quantity} }{\frac{Change\ in\ price}{Average\ price}}[/tex]

[tex]Elasticity\ of\ supply=\frac{\frac{109-37}{109+37} }{\frac{10.75-5.50}{10.75+5.50}}[/tex]

[tex]Elasticity\ of\ supply=\frac{\frac{72}{146}}{\frac{5.25}{16.25}}[/tex]

[tex]Elasticity\ of\ supply=\frac{0.493}{0.323}[/tex]

                                       = 1.526

                                   

bcrinitiative

Answer:

The elasticity of supply for hot cocoa is: 1.53

Explanation:

Elasticity of supply measures the response of the market in terms of supplied quantity as a result of changes in price. The mid point formula calculates elasticity by dividing the average change in quantity supplied brought about by the average change in price. This can be depicted as:

(New quantity - Old quantity)/ (New quantity + Old quantity)/2 *100

(New price - Old price)/ (New price + Old price)/2 * 100

In the market for Hot Cocoa, elasticity is: 1.526

(109 - 37)/ (109 + 37)/2 *100

($10.75 - $5.50)/ ( $10.75 + $5.50 )/2 * 100

= (72/73*100)/(5.25/8.125)*100

= 98.63014/64.615385

= 1.526