The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is
A) 0.33.
B) 0.67.
C) 1.67.
D) 0.60.
E) 0.40.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, the quantity supplied decreases from 20 to 10, a decrease of 50%. The price decreases from $6 to $4, a decrease of 33.3%. Therefore, the price elasticity of supply is 50% / 33.3% = 1.67.

The Initial Price of Picture Frames Is $6 and Suppliers