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JAMB Economics 2014 Paper

Question : 47

Total: 49

From the table above, Calculate the price elasticity of supply

Solution:

Concept:

Price elasticity of supply measures how much quantity supplied responds to a change in price.

Explanation:

Use the formula:

E_s = \frac{\%\Delta \text{Quantity Supplied}}{\%\Delta \text{Price}}

From the table, quantity supplied rises from

20

24

\Delta Q_s = 24 - 20 = 4

\%\Delta Q_s = \frac{4}{20} \times 100 = 20\%

Price rises from

8

10

\Delta P = 10 - 8 = 2

\%\Delta P = \frac{2}{8} \times 100 = 25\%

Now substitute into the elasticity formula:

E_s = \frac{20\%}{25\%} = 0.80

Answer:

The price elasticity of supply is

0.80

Correct option: B.

0.80

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