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Dima020 [189]
4 years ago
10

Assume Qd=10-2p and Qs=p what is the elasticity of Supply if price increases from $1 to $3?

Business
1 answer:
never [62]4 years ago
6 0

Answer:

A. unit elastic

Explanation:

The price elasticity of supply can be calculated by a formula as below:

+) Price elasticity of supply = Changes in supplied quantity/ Changes in prices <em>                                           = (%ΔQs)/(%ΔP)</em>

When price = $1, the quantity supplied is: Qs = p = 1

When price = $3, the quantity supplied is: Qs = p = 3

So that when price increases from $1 to $3, the quantity supplied changes from 1 to 3.

=> Changes in supplied quantity is: 3 -1 = 2

Changes in price is: $3 - $1 = $2

<em>=> Price elasticity of supply = 2/2 =1 </em>

When the price elasticity of supply is equal exactly to 1, the product is considered to be <em>unit - elastic. </em>

<em>So that A is the true answer.</em>

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Please post the full question together next time.

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