Final answer:
The price elasticity of supply at equilibrium is determined using the demand equation and the fact that the supply curve has unitary elasticity. Solving the demand and supply equations for equilibrium and then computing the elasticity using the slope of the supply curve and the given change in price and quantity accomplishes this.
Step-by-step explanation:
The question involves calculating the price elasticity of supply at the equilibrium using the demand equation and supply equation provided. To find the equilibrium price and quantity, we set the demand equation P = 100 - Q equal to the supply equation P = 25 + 0.5Q and solve for Q. This will give us the quantity at equilibrium, followed by calculating the price at this quantity. Afterward, the elasticity of supply is calculated using the formula (% change in quantity supplied) / (% change in price), where we use the slope of the supply curve as part of the % change in quantity supplied computation.
The hint mentions that the supply curve has unitary elasticity in this area, which means the price elasticity of supply is equal to 1. The calculation given shows a movement from point N to point P on the supply curve, with the price rising from $12 to $13, and the quantity supplied (Qs) rising from 95 to 100 units. The percentage change in quantity supplied would be calculated as follows: ((100 - 95) / ((100 + 95) / 2)) x 100.