Answer:
the arc price elasticity of supply is [tex]\frac{5}{2}[/tex]
Explanation:
Given:
P1: $1 and Q1 = 5 thousand tons
P2:$2 and Q2 = 55 thousand tons
We need to find:
%ΔQ = [tex]\frac{Q2-Q1}{(Q1+Q2)/2}[/tex] = [tex]\frac{55-5}{(55+5)/2}[/tex] = [tex]\frac{5}{3}[/tex]
%ΔP = [tex]\frac{P2-P1}{(P1+P2)/2}[/tex] = [tex]\frac{2-1}{(1+2)/2}[/tex] = [tex]\frac{2}{3}[/tex]
As we know that, the arc price elasticity of supply :
E = %ΔQ / %ΔP
<=> E = [tex]\frac{5}{3} /\frac{2}{3}[/tex] = [tex]\frac{5}{2}[/tex]
