Important question in elasticity - When …
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Gaurav Seth 6 years, 8 months ago
Ed=change in quantity÷change in price×price÷quantity
Change in quantity=5–4=1
Change in price=120–100=20
20÷1×4÷100=0.8
No the supply is not elastic. It is inelastic because price elasticity of supply is less than one
whenever, the Price elasticity of supply is less than 1 that means the situation is inelastic. Meaning it is harder for suppliers to adapt quickly to the price changes.
In conclusion: The PES = 0.8 which is inelastic meaning the price change will not have a major impact on the quantity supplied.
3Thank You