Suppose a producer decides that if the price of her product is $32,the quantity supplied will be 1,000 units,and if the price is $35,the quantity supplied will be 1,300.The price elasticity of supply for the good is approximately
A) +1.91.
B) -2.91.
C) +0.34.
D) -0.34.
E) +2.91.

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 ((1300 - 1000) / 1000) * 100 = 30%. The percentage change in price is ((35 - 32) / 32) * 100 = 9.375%. Therefore, the elasticity is 30% / 9.375% = 3.2, which is closest to +2.91.

Suppose a Producer Decides That If the Price of Her