Assume the price of textbooks rises from $90 to $110 and the quantity supplied increases from 750 to 850 per week.Using the initial price method the price elasticity of supply is:
A)1.67.
B).60.
C)1.5.
D).12.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated using the formula: (Percentage change in quantity supplied) / (Percentage change in price). The percentage change in quantity supplied is ((850-750)/750)*100 = 13.33%, and the percentage change in price is ((110-90)/90)*100 = 22.22%. Therefore, the elasticity is 13.33% / 22.22% = 0.60.

Assume the Price of Textbooks Rises from $90 to $110