7. refer to figure 5 - 6. using the midpoint method, what is the price elasticity of supply between points d…

7.

Explanation:

Step1: Identify the formula for price - elasticity of supply using mid - point method

The formula for price elasticity of supply ($E_s$) using the mid - point method is $E_s=\frac{%\Delta Q}{%\Delta P}=\frac{\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}}{\frac{P_2 - P_1}{(P_2 + P_1)/2}}$, where $Q$ is quantity supplied and $P$ is price. From the graph, at point D, $P_1 = 8$, $Q_1=400$ and at point E, $P_2 = 10$, $Q_2 = 450$.

Step2: Calculate the percentage change in quantity supplied

$%\Delta Q=\frac{Q_2 - Q_1}{(Q_2+Q_1)/2}=\frac{450 - 400}{(450 + 400)/2}=\frac{50}{425}\approx0.118$

Step3: Calculate the percentage change in price

$%\Delta P=\frac{P_2 - P_1}{(P_2 + P_1)/2}=\frac{10 - 8}{(10 + 8)/2}=\frac{2}{9}\approx0.222$

Step4: Calculate the price elasticity of supply

$E_s=\frac{%\Delta Q}{%\Delta P}=\frac{0.118}{0.222}\approx0.53$

Answer:

a. 0.53

8.

Brief Explanations:

When large changes in price lead to no changes in quantity demanded, demand is perfectly inelastic. In a perfectly inelastic demand situation, the quantity demanded does not respond to price changes, and the demand curve is vertical.

Answer:

a. inelastic, and the demand curve will be vertical.

9.

Brief Explanations:

Cross - price elasticity of demand is positive for substitute goods. Substitute goods are those that can be used in place of each other. Pens and pencils are substitute goods for writing. An increase in the price of pens will lead to an increase in the demand for pencils, resulting in a positive cross - price elasticity. Peanut butter and jelly, bicycle frames and bicycle tires are complementary goods (cross - price elasticity is negative). Digital college textbooks and iPhones are not closely related in a way that would result in a positive cross - price elasticity.

Answer:

c. Pens and pencils