If the price of cocoa rises by 20 percent, the quantity supplied of cocoa rises by 4 percent. What is the elasticity of supply?

Business

1 answer:

Talja [164]3 years ago

3 0

Answer: 0.2

Explanation:

Elasticity of supply shows the responsiveness to the quantity supplied for a good or service to changes in market price. Supply is Elastic if its elasticity is greater than 1 and inelastic if elasticity is less than 1

Elasticity of supply = Percentage change in quantity supplied / Percentage change in Price

= 4%/ 20%

=0.2 which is inelastic.

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