If price equals $10 and supply is P = 5 + 7Q,the price elasticity of supply is

Question

Quizplus · Accepted Answer

The price elasticity of supply can be calculated by taking the percentage change in quantity supplied divided by the percentage change in price. In this case, the supply function is P = 5 + 7Q. To find the quantity supplied at a price of $10, we can set P equal to 10 and solve for Q: 10 = 5 + 7Q, so Q = 1. Using this information, we can calculate the elasticity as:
(Change in quantity supplied / Original quantity supplied) / (Change in price / Original price)
= [(Q2 - Q1) / Q1] / [(P2 - P1) / P1]
= [(1 - 0) / 0.5] / [(10 - 9) / 9]
= 2.25
Since the elasticity is greater than 1, the supply is considered elastic.

If Price Equals $10 and Supply Is P = 5