Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twisty-ties is:
A) 4.0.
B) 0.4.
C) 2.0.
D) 0.2.
E) 1.0.

Question

Quizplus · Accepted Answer

Price elasticity of supply (PES) is calculated as the percentage change in quantity supplied divided by the percentage change in price. Using the given information, we can calculate the PES as follows:

PES = (% change in quantity supplied) / (% change in price)
PES = (-10%) / (-5%)
PES = 2.0

Therefore, the answer is C) 2.0. Firms supplying twisty-ties have a price elasticity of supply of 2.0, which means that a 1% change in price leads to a 2% change in quantity supplied.

Firms Supplying Twisty-Ties Decrease the Quantity Supplied of Inputs by 10