Suppose tennis shoes cost $50 per pair and firms supply 50,000 pairs of shoes. If the price decreases to $45 and firms decide to supply 48,000, the elasticity of supply equals

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The elasticity of supply is calculated using the formula: [(Q2 - Q1) / (Q2 + Q1) / 2] / [(P2 - P1) / (P2 + P1) / 2], 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: [(48,000 - 50,000) / (48,000 + 50,000) / 2] / [($45 - $50) / ($45 + $50) / 2] = -2,000 / 49,000 / -5 / 47.5 = 0.39.

Suppose Tennis Shoes Cost $50 Per Pair and Firms Supply