From the table above, Calculate the price elasticity of s...
From the table above, Calculate the price elasticity of supply
0.50
0.80
2.00
1.25
Correct answer is B
The elasticity of supply = % change in quantity supplied /%change in price
First, we calculate the individual change in supply and price. hence we have:
For supply we have: ∆Qs/Old Qs x 100
=(24 - 20 )/20 x 100
=4/20 x 100
=20%
For price we have: ∆P/Old price x 100
=(10 - 8 )/8 x 100
=2/8 x 100
=25%
%∆Qs/%∆price
=20/25
=0.8
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