Answer to Question #126717 in Microeconomics for Mpho

Question

Based on elasticity coefficient of 1.89 , explain how biltong producers can increase total revenue from the sale of biltong.

Answer 1

The coefficient of price elasticity of supply shows the degree of quantitative change in supply when the price changes by 1%. The degree of change in the volume of supply depending on price changes characterizes the price elasticity of supply.

1.89 mean that supply volume changes more than price. Consequently, in the long term, care must be taken not to enter the stage of overproduction. That is, make modifications to the product in time, or replace it with a new product with similar consumer qualities.