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suppose a producer decides that if the price of her product is $42, the quantity supplied will be 1,000 units, and if the price is $45, the quantity supplied will be 1,300. the price elasticity of supply for the good is approximately

Respuesta :

The price elasticity of supply for the good is 0.238.

The price elasticity of supply measures how the quantity supplied responds to changes in the price of a good.

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

Types of price elasticity of supply

  1. Elastic supply: the coefficient of elasticity is greater than one
  2. Inelastic supply: the coefficient of elasticity is less than one
  3. Unit elastic supply: the coefficient of elasticity is equal to one  

Percentage change in the quantity supplied = (45 / $42) - 1 = 0.0714 = 7.14%

percentage change in the price of the good = (1300 / 1000) - 1 = 0.3 = 30%

Price elasticity of supply = 7.14 / 30 = 0.238

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