Final answer:
The supply of a good is determined to be elastic or inelastic using the midpoint method by comparing the percentage changes in quantity and price. The supply is unitary elastic in the example given, with matching percentage changes in quantity and price along the supply curve.
Step-by-step explanation:
To determine whether the supply of a good is elastic or inelastic using the midpoint method, one can analyze the percentage changes in quantity and price along the supply curve. When the percentage changes in quantity supplied and price are equal, the supply is said to have constant unitary elasticity, indicating that it is neither elastic nor inelastic, but rather responsive at a constant rate to price changes. If the percentage change in quantity supplied is greater than the percentage change in price, the supply is considered elastic, and if it is smaller, the supply is inelastic. Here, along the supply curve with points D to E to F to G, we see a constant unitary elasticity as the percentage changes in quantity and price match. Even though the absolute change in quantity (30 units) and price ($1.50) is constant, the percentages decrease because of the expanding denominator, which reflects higher initial points for both price and quantity in the calculation.