Question

Calculate the price elasticity of supply for Bobbie's Bakery's banana bread. When the price changes by 29% the quantity supplied changes by 55%. Round your answer to two decimal places.

Answer 1

The price elasticity of demand is 1.90.

What is the price elasticity of demand?

Price elasticity of supply measures the responsiveness of quantity supplied to changes in price of the good. It is expected that quantity supplied would be positively related to the price of the good.

Price elasticity of supply = percentage change in quantity supplied / percentage change in price

55% / 29% = 1.90

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