Suppose That an Increase in the Price of Rare Cockatoos

Multiple Choice

Suppose that an increase in the price of rare cockatoos from $1000 to $1600 prompts breeders to increase the supply of these birds on the market from 600 to 1000. Using the midpoint method, what would be the elasticity of supply?

A) 0.50
B) 0.92
C) 1.00
D) 1.08