Price Elasticity of Supply Practice Test

Using the supply data shown for a local bakery’s cupcakes in the next week (the bakery has limited oven capacity and cannot add new ovens in that time), calculate the price elasticity of supply between Point A and Point B using the midpoint method.

Point A: $P = $10 per dozen, $Q_s = 40$ dozen

Point B: $P = $12 per dozen, $Q_s = 48$ dozen

Using the supply data shown for a software firm selling licenses in the next day (digital delivery allows rapid scaling with minimal capacity constraints), is supply elastic, inelastic, or unit elastic over this price range? Use the midpoint method.

Point A: $P = $20 per license, $Q_s = 500$ licenses

Point B: $P = $25 per license, $Q_s = 750$ licenses