If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units
then the value of price elasticity of supply is.
a. 0.38
b. 2
c. 2.67
d. 4
e. 8

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  1. Use this definition:
    PEoS = (% Change in Quantity Supplied)/(% Change in Price)
    = 400%/100% = __?

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  2. the answer is 2 (b) thanks!

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  3. It seems to me that it is 4 (d)

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  4. The teacher verified that the answer is b not d.

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  5. The price elasticity of demand for cigarettes is estimated to be (-.4) and the income elasticity is about (+5).
    a- Suppose the government impose a tax on cigarettes so the price rises by 10%. Estimate the effect this price increase will have on cigarettes consumption and consumer spending on cigarettes. (both in percentage terms)

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