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Reil [10]
3 years ago
5

At a price of $200, a cell phone company manufactures 100000 phones. At a price of $300, the company produces 300000 phones. Wha

t is the price elasticity of supply? (Round your answer to two decimal places.)
Business
1 answer:
valkas [14]3 years ago
4 0

Answer:

2.5

Explanation:

P1=$200

P2=$300

S1=100000

S2=300000

The percentage change in price is:

\Delta P =\frac{300-200}{\frac{200+300}{2}}=0.4=40\%

The percentage change in supply is:

\Delta S =\frac{300000-100000}{\frac{100000+300000}{2}}=1=100\%

The price elasticity of supply is given by:

E=\frac{\Delta S}{\Delta P}=\frac{100\%}{40\%}=2.5

The price elasticity of supply is 2.5.

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