Consider the following supply schedule:
What is the price elasticity of supply between
- a. P = $10 and P = $8?
- b. P = $8 and P = $6?
- c. P = $6 and P = $4?
- d. P = $4 and P = $2?
- e. P = $2 and P = $0?
(a)
Price elasticity of supply.
Explanation of Solution
The general formula for calculating price elasticity of supply is given below:
Substitute the respective values in Equation (1) to calculate the price elasticity of supply in first case.
Price elasticity of supply is 1.
Price elasticity of supply: Price elasticity of demand is the responsiveness of the quantity supplied to the change in price, which is measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the price of a product.
(b)
Price elasticity of supply.
Explanation of Solution
By using Equation (1), the calculation of price elasticity of supply in second case is shows below:
Price elasticity of supply is 1.
Price elasticity of supply: Price elasticity of demand is the responsiveness of the quantity supplied to the change in price, which is measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the price of a product.
(c)
Price elasticity of supply.
Explanation of Solution
By using Equation (1), the calculation of price elasticity of supply in third case is shown below:
Price elasticity of supply is 1.
Price elasticity of supply: Price elasticity of demand is the responsiveness of the quantity supplied to the change in price, which is measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the price of a product.
(d)
Price elasticity of supply.
Explanation of Solution
By using Equation (1), the calculation of price elasticity of supply in fourth case is shown below:
Price elasticity of supply is 1.
Price elasticity of supply: Price elasticity of demand is the responsiveness of the quantity supplied to the change in price, which is measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the price of a product.
(e)
Price elasticity of supply.
Explanation of Solution
By using Equation (1), the calculation of price elasticity of supply in fifth case is shown below:
Price elasticity of supply is 1.
Price elasticity of supply: Price elasticity of demand is the responsiveness of the quantity supplied to the change in price, which is measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the price of a product.
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Micro Economics For Today
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