Question

On most days, the price of a rose is $1, and 8,000 roses are purchased. On Valentine’s Day, the price of a rose jumps to $2, and 30,000 roses are purchased.

Use the line drawing tool to illustrate the price and quanity increase. Label the line you draw ‘D1’

carefully follow the instruction above, and only draw the required objects.

Based on this information, we do not know how much about the price elasticity od demand for roses because the demand occur was not constant.

However, we do have constant supply. What is price elasticity of supply? _____ (Enter yiur response to 2 decimal places.)

Price (dollars per rose) 0 + 0 10 20 30 40 50 Quantity (thousands of roses per day)

Answer 1

Price C& Perrores) Do I 30 cs scanned with Ouantity (Thamends of roses per day) CamScanner

Here, P1 = $1   Q1 = 8,000

         P2 = $2     Q2 = 30,000

Price elasticity of supply = (Q2 - Q1) / (P2 - P1) * (P1 + P2) * (Q1 + Q2)

                                       = (30,000 - 8,000) / (2 - 1) * (1 + 2) * (8,000 + 30,000)

                                       = (22,000 / 1) * (3 / 38,000)

                                       = 66,000 / 38,000

                                       = 1.74

Thus, the Price elasticity of supply is 1.74.