In response to an increase in price from $5 per kilo to $6 per kilo, a chicken farmer increased supply from 400 kilos to 500 kilos per week. What is the price elasticity of supply?

A) 0.8
B) 0.9
C) 1.2
D) 1.25

The price elasticity of supply in this case can be calculated using the formula: % change in quantity supplied / % change in price. With a price increase of 20% and quantity supplied increase of 25%, the price elasticity of supply is 1.25.

Explanation:

The price elasticity of supply is a measure of how much the quantity supplied of a good changes when its price changes. It's calculated by the formula: % change in quantity supplied / % change in price.

In this case, the change in price is from $5 to $6, which is a change of 20% ((6-5)/5). The change in quantity supplied is from 400 kilos to 500 kilos, which is a change of 25% ((500-400)/400).

Therefore, the price elasticity of supply is 25% / 20% = 1.25.

So, the answer is D) 1.25.

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In response to an increase in price from $5 per kilo to $6 per kilo, a chicken farmer increased supply from 400 kilos to 500 kilos per week. What is the price elasticity of supply?A) 0.8 B) 0.9 C) 1.2 D) 1.25

Answer :

Final answer:

Explanation:

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Other Questions

In response to an increase in price from $5 per kilo to $6 per kilo, a chicken farmer increased supply from 400 kilos to 500 kilos per week. What is the price elasticity of supply?

A) 0.8
B) 0.9
C) 1.2
D) 1.25