Homework Answers
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.
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