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UI Post-UTME Economics 2016 (Model questions) Question 10

Question 10

Elasticity

Price (₦): 8, 10; Quantity supplied: 20, 24. From the table above, calculate the price elasticity of supply

  1. A.0.50
  2. B.0.80
  3. C.2.00
  4. D.1.25
Show the answer and explanation

Answer: B (0.80)

Explanation

% change in quantity = 4/20 × 100 = 20%; % change in price = 2/8 × 100 = 25%; PES = 20/25 = 0.8.