Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent. The coefficient of price elasticity of supply for good X is?
i took this class last semester and if i remember correctly the equation for this was
PES = percent change in quanitiy supplied/ percent change in price
so what we have here is 0.15/0.20 = a coefficent of 0.75 which the supply is inelastic
hope i helped and if this was correct
To calculate the coefficient of price elasticity of supply, you need to use the formula:
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
In this case, the % change in price is given as a 20 percent increase, and the % change in quantity supplied is given as a 15 percent increase. Plugging these values into the formula, we get:
Elasticity of Supply = (15% / 20%) = 0.75
Therefore, the coefficient of price elasticity of supply for good X is 0.75.
To determine the coefficient of price elasticity of supply (PES), we need to calculate the percentage change in quantity supplied divided by the percentage change in price.
The formula to calculate the PES is:
PES = (% Change in Quantity Supplied) / (% Change in Price)
Given that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent, we can substitute these values into the formula.
% Change in Quantity Supplied = 15%
% Change in Price = 20%
PES = (15% / 20%) = 0.75
Therefore, the coefficient of price elasticity of supply (PES) for good X is 0.75.