Final answer:
To calculate the price elasticity of supply using the midpoint method, divide the percentage change in quantity by the percentage change in price, using averages of the initial and final quantities and prices.
Step-by-step explanation:
The question asks about how to calculate the price elasticity of supply using the midpoint method. To do this, you use the given formula which is the percentage change in quantity divided by the percentage change in price.
The midpoint method takes the average of the starting and ending prices (as well as quantities) to calculate changes, thus providing the same elasticity result whether prices are increasing or decreasing.
To calculate the price elasticity of supply, you would identify two points on the supply curve, say (Q1, P1) and (Q2, P2). Then, calculate the percentage change in quantity using the formula ((Q2 - Q1)/((Q1 + Q2)/2) and the percentage change in price using ((P2 - P1)/((P1 + P2)/2). Finally, divide the percentage change in quantity by the percentage change in price to get the elasticity.