Suppose the price of textbooks rises from $90 to $110 and the quantity supplied increases from 750 to 850 per week.Using the initial-price method,the price elasticity of supply is
A) 0.12.
B) 0.60.
C) 1.5.
D) 1.67.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated using the formula: [(Q2 - Q1) / Q1] / [(P2 - P1) / P1], where Q1 and Q2 are the initial and final quantities supplied, and P1 and P2 are the initial and final prices. Plugging in the given values: [(850 - 750) / 750] / [(110 - 90) / 90] = 100/750 / 20/90 = 0.1333 / 0.2222 = 0.60.

Suppose the Price of Textbooks Rises from $90 to $110