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

question 109

Multiple Choice

Suppose that an increase in the price of carrots from $1.30 to $1.80 per pound increases the quantity of carrots that carrot 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:

Marginal Cost

The additional financial burden incurred when one more unit of a good or service is produced.

Positive-Sum Game

In game theory, a game in which the gains (+) and losses (−) add up to more than zero; one party’s gains exceed the other party’s losses. A strategic interaction (game) between two or more parties (players) in which the winners’ gains exceed the losers’ losses so that the gains and losses sum to something positive.

Positive Payoffs

Benefits or gains that are realized from an investment or action, often assessed in terms of profitability or value added.

Players

Individuals or entities actively involved in a process or activity, often used in the context of games, sports, or markets.