Question

If the price of Banana rises from ` 30 per dozen to ` 40 per dozen and the supply increases from 240 dozen to300 dozens elasticity of supply is: (use arc elasticity Method)(a) .7(b) -.67(c) .65(d) .77

Answer 1

q1 = 240, q2 = 300
p1 = 30, p2 = 40

Elasticity of supply =
(q1 - q2) / (q1 + q2) × (p1 + p2) / (p1 - p2)

= (-60 × 70 ) / ( 540 × -10 )
= 0.77