Refer to the Graph Above

question 14

Multiple Choice

Refer to the graph above.Over the $5-$6 range,the elasticity of supply using the midpoints formula is:

• A) 0.22.
• B) 0.88.
• C) 1.00.
• D) 1.22. The change in quantity is (50 - 40)/(50 + 40)= 0.111 and the change in price is (6 - 5)/(6 + 5)= 0.091.Thus elasticity is 0.111/0.091 = 1.22.

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Definitions:

Average Revenue

The amount of revenue received per unit of a good or service sold, calculated by dividing total revenue by the total number of units sold.

Maximize Profits

Business objective to achieve the highest possible profit from operations and sales.

Minimize Losses

A strategy aimed at reducing the negative impacts or financial losses in operations, investments, or other activities.

Market Price

The current price at which a good or service can be bought or sold in a marketplace, determined through the supply and demand dynamics.