Economics – The allocation of resources - Price elasticity of supply (PES) | e-Consult
The allocation of resources - Price elasticity of supply (PES) (1 questions)
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1. Calculate the percentage change in quantity supplied:
Original Quantity Supplied = 500 kg
New Quantity Supplied = 800 kg
Change in Quantity Supplied = 800 - 500 = 300 kg
Percentage Change in Quantity Supplied = (300 / 500) * 100 = 60%
2. Calculate the percentage change in price:
Original Price = £1
New Price = £2
Change in Price = £2 - £1 = £1
Percentage Change in Price = (£1 / £1) * 100 = 100%
3. Calculate the PES using the midpoint formula:
PES = (% Change in Quantity Supplied) / (% Change in Price)
PES = (60 / 100) = 0.6
Answer: The Price Elasticity of Supply (PES) is 0.60.