A rise in the price of cabbage from $14 to $18 per carton increases the quantity supplied from 4,000 to 6,000 cartons. The elasticity of supply is
A) 0.8.
B) 1.0.
C) 0.6.
D) 1.6.

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated using the formula: Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price). Here, the % change in quantity supplied is (6000 - 4000) / 4000 = 0.5 or 50%, and the % change in price is (18 - 14) / 14 = 0.2857 or 28.57%. Thus, Elasticity of Supply = 0.5 / 0.2857 = 1.75, which is approximately 1.6 when rounded to the nearest tenth.

A Rise in the Price of Cabbage from $14 to $18