The quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from textsterling4/ton to textsterling5/ton. The price elasticity of supply for peanuts over this price range is:

ELASTICITY OF DEMAND

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The quantity of peanuts supplied increased from 40 tons/week to 60 tons/week when the price of peanuts increased from £4/ton to £5/ton. The price elasticity of supply for peanuts over this price range is:

A	Elastic
B	Inelastic
C	Unit Elastic
D	Perfectly Inelastic

Explanation:

Detailed explanation-1: -Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded-or supplied-divided by the percentage change in price.

Detailed explanation-2: -Relatively Elastic Supply A price elasticity supply greater than one means supply is relatively elastic, where the quantity supplied changes by a larger percentage than the price change.

Detailed explanation-3: -The price elasticity of supply = % change in quantity supplied / % change in price. When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.

Detailed explanation-4: -On a linear demand curve, the price elasticity of demand varies depending on the interval over which we are measuring it. For any linear demand curve, the absolute value of the price elasticity of demand will fall as we move down and to the right along the curve.

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ECONOMICS (CBSE/UGC NET)

ECONOMICS

ELASTICITY OF DEMAND