Consider the Market in the Graph Shown

question 56

Multiple Choice

Consider the market in the graph shown. Using the mid-point method, what is the price elasticity of supply when the price increases from $4 to $7?

• A)1.13
• B)0.4
• C)0.45
• D)0.89

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Definitions:

Compounded Semiannually

A method where interest payments are made on an investment or loan twice each year, leading to interest being earned on previously earned interest.

Annually Compounded

Pertaining to interest on investment or loans that is calculated once a year, adding to the sum each year.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, often used as an indicator of inflation.

Real Rate Of Return

The annual percentage profit earned on an investment, adjusted for changes in the price level due to inflation.