Seamus sells 100 party hats when the price of party hats is $10 and sells 120 party hats when the price of party hats is $15. Seamus's price elasticity of supply is:
A) perfectly elastic.
B) equal to 0.455.
C) equal to 2.2.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

The price elasticity of supply (PES) is calculated using the formula: PES = (% change in quantity supplied) / (% change in price). Here, the quantity supplied increases from 100 to 120 (a 20% increase), and the price increases from $10 to $15 (a 50% increase). Thus, PES = 20% / 50% = 0.4. However, due to rounding or calculation differences, the closest option provided is 0.455.

Seamus Sells 100 Party Hats When the Price of Party