As the price of tomatoes fell from $2.50 to $2.00, the quantity imported from Mexico fell from 1,800 tons to 900 tons. The elasticity of supply of tomatoes imported from Mexico is:
A) 0.25.
B) 0.3.
C) 3.0.
D) 5.

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. The quantity change is (900-1800)/1800 = -0.5, and the price change is (2.00-2.50)/2.50 = -0.2. Elasticity = -0.5 / -0.2 = 2.5. However, since the question asks for the elasticity of supply, which is typically positive, the closest option is 3.0.

As the Price of Tomatoes Fell from $2