ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The price of a chair has increased by 25% and the PES= 4. What is the percentage change in quatity suppiled?
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4%
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1000%
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100%
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40%
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Explanation:
Detailed explanation-1: -As per the PES Formula to find the PES, just divide the change in quantity by the change in price. To know it in percentage just multiply the obtained value of PES with 100.
Detailed explanation-2: -The price elasticity of supply = % change in quantity supplied / % change in price.
Detailed explanation-3: -If the percentage change is not given in a problem, it can be computed using the following formula: Percentage change in Qd = (Q1-Q2) / [1/2 (Q1+Q2)] where Q1 = initial Qd, and Q2 = new Qd.
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