At price of $1.20, a local pencil manufacturer is willing to supply 150 boxes per day. At a price of $1.40, the manufacturer is willing to supply 170 boxes per day. Using the midpoint method, the price elasticity of supply is about

A. 1.00.
B. 2.0.
C. 1.23.
D. 0.81.

D. 0.81.

Explanation:

The computation of the price elasticity of supply using mid point formula is shown below:

= (change in quantity supplied ÷ average of quantity supplied) ÷ (percentage change in price ÷  average of price)

where,

Change in quantity supplied is

= Q2 - Q1

= 170 -150

= 20

And, the average of quantity supplied would be

= (170 + 150) ÷ 2

= 160

Change in price would be

= P2 - P1

= $1.40 - $1.20

= $0.20

And,  an average of price is

= ($1.40 + $1.20) ÷ 2

= $1.3

So, after solving this, the price elasticity of supply is 0.81

the answerr would be 1