Question

If 5% increase in price result in a 3% increase in quality supplied, the elasticity of supply is _______. Options:(1) 1.20 (2)0.6 (3) 1.66 (4) 0.3​

Answer 1

Answer:

(3) 1.666

Explanation:

The elasticity Of supply must be found by dividing those 2 percentages

So the answer is 1.66

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Answer 2

If a 5% increase in price results in a 3% increase in quality supplied, the elasticity of supply is (2) 0.6

Elasticity of supply-

The responsiveness of the supply of goods when there is a change in the price of goods and other factors is called the elasticity of supply.

It can be defined as a percentage change in quantity supplied divided by a percentage change in the price.

Numerically, $E_{s}$$=\frac{\triangle\\Q}{\triangle\\P}$

where   $E_{s}=$ the elasticity of supply

            $\triangle Q$$=$ percentage change in quantity supplied

           $\triangle P$$=$percentage change in price

 Here,

$\triangle Q$= 3% , $\triangle P$= 5%

∴ $E_{s}=$ $\frac{3}{5}$

        =0.6

Thus, the elasticity of supply will be 0.6