Suppose When the Price of Cupcakes Goes from $2 to $3

question 104

Multiple Choice

Suppose when the price of cupcakes goes from $2 to $3 per cupcake, production increases from 350,000 cupcakes to 450,000 cupcakes per year. Using the mid-point method, what is the price elasticity of supply?

• A) 1.6
• B) 0.4
• C) 0.25
• D) 0.63

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