When the price of a DVD is $9,the quantity supplied is 4,000.When the price of a DVD is $11,the quantity supplied is 6,000.What is the elasticity of supply when the price of a DVD is $10?
A)0.5
B)0.8
C)1.0
D)2.0
E)20.0

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated using the formula: percentage change in quantity supplied / percentage change in price. From $9 to $11, the price increases by $2, which is a 22.22% increase from the base price of $9. The quantity supplied increases from 4,000 to 6,000, which is a 2,000 increase or a 50% increase from the base of 4,000. Therefore, the elasticity of supply is 50% / 22.22% = 2.25, which rounds to 2.0, indicating option D is correct.

When the Price of a DVD Is $9,the Quantity Supplied