Question

Hi i have tried many textbooks and online resources but cannot find the solution to the following revision questions, your help will be greatly appreciated.

1) If the supply equation is given as Q = -200 + 10p and the price of supply changes from R40 to R50. Using the arc elasticity of supply what is the price of elasticty of supply?

Answer 1

Question #69579, Economics / Microeconomics

Hi i have tried many textbooks and online resources but cannot find the solution to the following revision questions, your help will be greatly appreciated.

1) If the supply equation is given as $Q = -200 + 10p$ and the price of supply changes from R40 to R50. Using the arc elasticity of supply what is the price of elasticity of supply?

Answer:

P=40 Q=-200+10*40=200

P=50 Q=-200+10*50=300

E _ {z} ^ {P} = \frac {\frac {Q _ {2} - Q _ {1}}{\left(\frac {Q _ {1} + Q _ {2}}{2}\right)} = \frac {\frac {3 0 0 - 2 0 0}{\left(\frac {2 0 0 + 3 0 0}{2}\right)}}{\frac {P _ {2} - P _ {1}}{\left(\frac {P _ {1} + P _ {2}}{2}\right)}} = \frac {5 0 - 4 0}{\left(\frac {4 0 + 5 0}{2}\right)} = \frac {0 . 4}{0 . 2 2} = 1. 8 1

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