Suppose That an Increase in the Price of Melons from $1.30

question 76

Multiple Choice

Suppose that an increase in the price of melons from $1.30 to $1.80 per pound increases the quantity of melons that melon farmers produce from 1.2 million pounds to 1.6 million pounds.Using the midpoint method,what is the approximate value of the price elasticity of supply?

• A)0.67
• B)0.89
• C)1.00
• D)1.13

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Definitions:

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.

Income

Money received, especially on a regular basis, for work or through investments.

Going Rate

Refers to the current average cost or pricing point for goods, services, or wages in a particular market or industry.

Oil Well

A drilled site where petroleum and natural gas are extracted from beneath the earth's surface.