To calculate the price elasticity of supply using the midpoint method between the prices of $2 and $2.50 per cup, we need to apply the formula for price elasticity of supply:

$E_s = \frac{\text{Percentage Change in Quantity Supplied}}{\text{Percentage Change in Price}} = \frac{\left(\frac{Q_2 - Q_1}{(Q_2 + Q_1)/2}\right)}{\left(\frac{P_2 - P_1}{(P_2 + P_1)/2}\right)}$

Where:

• $P_1 = 2$ and $P_2 = 2.50$ are the prices.
• $Q_1$ and $Q_2$ are the corresponding quantities of lattes at these prices.

Let's extract the quantities $Q_1$ and $Q_2$ from the graph at the prices of $2 and $2.50 per cup. I'll now look at the graph to determine the values for these quantities. PIL import Image

Load the image to extract relevant quantities visually.

image_path = '/mnt/data/17404188384845nvtwqpr.jpg' img = Image.open(image_path)

Display the image for analysis

img.show()I've displayed the graph for analysis. Now, I will examine the graph to extract the relevant quantities corresponding to the prices of $2 and $2.50 per cup. I'll use these values to calculate the price elasticity of supply.From the graph:

• At a price of $2 per cup, the quantity supplied is about 300 lattes.
• At a price of $2.50 per cup, the quantity supplied is about 600 lattes.

Now, we can apply these values to the midpoint formula for price elasticity of supply:

$E_s = \frac{\left(\frac{600 - 300}{(600 + 300)/2}\right)}{\left(\frac{2.50 - 2}{(2.50 + 2)/2}\right)}$

Let's calculate the elasticity. Given data P1 = 2 P2 = 2.50 Q1 = 300 Q2 = 600

Midpoint method formula for price elasticity of supply

percentage_change_quantity = (Q2 - Q1) / ((Q2 + Q1) / 2) percentage_change_price = (P2 - P1) / ((P2 + P1) / 2)

Price elasticity of supply

E_s = percentage_change_quantity / percentage_change_price E_sThe price elasticity of supply between $2 and $2.50 per cup, according to the midpoint method, is 3.0. This means the supply is relatively elastic over this price range.

Would you like further details on the calculation or any related questions? Here are some suggestions for follow-up:

1. How does the price elasticity of supply affect business pricing strategies?
2. What happens if the supply elasticity is less than 1 (inelastic)?
3. How can we use elasticity to predict changes in quantity supplied with a price increase?
4. What is the difference between price elasticity of demand and supply?
5. Can price elasticity of supply change over time?

Tip: Remember, when calculating price elasticity using the midpoint method, you should always use the average of the initial and final values in both the numerator and denominator.