chapter 05: aplia homework\nfor each of the regions, use the mid - point method to identify whether the…

Explanation:

Step1: Recall mid - point formula for price elasticity of supply

The mid - point formula for price elasticity of supply ($E_s$) is $E_s=\frac{%\text{ change in quantity supplied}}{%\text{ change in price}}=\frac{\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}}{\frac{P_2 - P_1}{(P_2+P_1)/2}}$.

Step2: Calculate elasticity between V and W

$P_1 = 22.5$, $P_2=30$, $Q_1 = 7$, $Q_2 = 17.5$. $%\text{ change in quantity supplied}=\frac{17.5 - 7}{(17.5 + 7)/2}=\frac{10.5}{12.25}=0.857$. $%\text{ change in price}=\frac{30 - 22.5}{(30 + 22.5)/2}=\frac{7.5}{26.25}=0.286$. $E_s=\frac{0.857}{0.286}\approx3$. Since $E_s> 1$, supply is elastic between V and W.

Step3: Calculate elasticity between X and Y

$P_1 = 135$, $P_2=270$, $Q_1 = 56$, $Q_2 = 63$. $%\text{ change in quantity supplied}=\frac{63 - 56}{(63 + 56)/2}=\frac{7}{59.5}\approx0.118$. $%\text{ change in price}=\frac{270 - 135}{(270+135)/2}=\frac{135}{202.5}=0.667$. $E_s=\frac{0.118}{0.667}\approx0.18$. Since $E_s<1$, supply is inelastic between X and Y.

Answer:

Between V and W: Elastic Between X and Y: Inelastic