The market supply curve for scooters is given by Qs = 2p – 100. If the market price is $144, what is the price elasticity of supply? [Round your answer to 2 decimal places]
Question
The market supply curve for scooters is given by Qs = 2p – 100. If the market price is $144, what is the price elasticity of supply? [Round your answer to 2 decimal places]
Solution 1
The price elasticity of supply is calculated as follows:
Es = (dQ/dP) * (P/Q)
The derivative of the supply function with respect to P (dQ/dP) is 2 (from the supply equation Qs = 2P - 100).
Substituting P = $144 into the supply equation, we get the quantity supplied:
Q = 2*144 - 100 Q = 288 - 100 Q = 188
So,
Es = 2 * (144 / 188) Es = 1.53
So, the price elasticity of supply at the market price of $144 is 1.53.
Solution 2
The price elasticity of supply is calculated as follows:
Es = (dQ/dP) * (P/Q)
The derivative of the supply function with respect to P (dQ/dP) is 2 (from the supply equation Qs = 2P - 100).
Substituting P = $144 into the supply equation, we get the quantity supplied:
Q = 2*144 - 100 Q = 288 - 100 Q = 188
So,
Es = 2 * (144 / 188) Es = 1.53
So, the price elasticity of supply at the market price of $144 is 1.53.
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