question archive Suppose that, when the average price of shoes increases by 5%, the quantity supplied of shoes increases by 8%
Suppose that, when the average price of shoes increases by 5%, the quantity supplied of shoes increases by 8%
Subject:EconomicsPrice:2.88 Bought3
Suppose that, when the average price of shoes increases by 5%, the quantity supplied of shoes increases by 8%.
What is the price elasticity of supply?
Is the supply of shoes elastic or inelastic?
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Suppose that, when the average price of shoes increases by 5%, the quantity supplied of shoe increases by 8%.
Recall the formula of price elasticity of supply.
Price elasticity of supply = Percentage change in price / Percentage change in quantity supply
E = 8 / 5 = 1.6
The supply of shoes is elastic because the price elasticity of supply is greater than one or percentage change in supply is more than the percentage change in price.
