Question

The price of a dozen eggs falls from $3 to $2.70. In response to this price change, the quantity supplied of eggs falls from 150,000 dozen eggs to 125,000 dozen eggs. What is the price elasticity of supply for eggs

Answer 1

Answer:

Price elasticity of supply=1.67

Explanation:

Price elasticity of supply is a measure of the degree of responsive of supply to a change in price . It is computed using the formula below:

% change in Quantity supply/% change in price

% change in Quantity supply= 125,000-150,000/150,000× 100=16.67%

% change in price = (2.70-3.00)/3.00× 100= 10.00%

Price elasticity of supply = 16.67/10.00=1.67

Price elasticity of supply=1.67