Mid-point formula to calculate price elasticity of supply

Reference no: EM13700931

Use the mid-point formula to calculate the price elasticity of supply (arc elasticity) for a given product under two scenarios:

a) When the price of a good is $100, 25 units are supplied. But when the price increases to $125, 30 units are supplied.

b) When the price of a good is $100, 25 units are supplied. But when the price decreases to $125, 35 units are supplied.

Which case is more likely to happen in the long-run? Explain why.

Reference no: EM13700931

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