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Luba_88 [7]
3 years ago
15

Suppose that the price of product x rises by 20 percent and the quantity supplied of x increases by 15 percent. The coefficient

of price elasticity of supply for good x is
Business
1 answer:
SSSSS [86.1K]3 years ago
3 0

Answer: Coefficient of elasticity of supply is 0.75.

Explanation:

Price elasticity of supply measures the responsiveness of quantity supplied to a change in the price of the good. It can be measured using the percentage point method,

e_{s} = \frac{Percentage change in Quantity supplied}{Percentage change in price}

=\frac{15}{20}

=0.75

Therefore, coefficient of elasticity of supply is 0.75. Since it is less than 1 we can infer that supply for this good is relatively inelastic.

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