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3 years ago

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The price elasticity of demand is –1.25, and the share of the tax borne by consumers is 0.80. what is the price elasticity of su

pply?

1 answer:

Musya8 [376]3 years ago

3 0

<span>Price elasticity of demand is -1.25 = Ed</span>

Price elasticity of supply = Es

Share of tax by consumers = 0.80 = Es / (Ed + Es) = Es / Es + 1.25

0.8 Es + 1 = Es

1 / 0.2 = Es = 5

Therefore, the price elasticity of supply is 5

<span> </span>

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