(2) The elasticity of demand for any product will depend on the level of its initial price and...

(2) The elasticity of demand for any product will depend on the level of its initial price and quantity, not just on the change in price. WRITE [11] What is the formula for measuring the price elasticity of supply? Suppose the price of apples goes up from $20 to $22 a box. In direct response, Goldsboro Farms supplies 1,200 boxes of apples instead of 1,000 boxes. Compute the coefficient of price elasticity (midpoints approach) for Goldsboros supply. It its supply elastic, or is it inelastic? Ans: Es = percentage change in quantity supplied / percentage change in price. Using the midpoint formula, Es = 1.91 {= (200/[(1000+1200)/2] / 2/[(20+22)/2]} Supply is price elastic (Es>1). CONSIDER [8] What are the major determinants of price elasticity of demand?