Respuesta :
The quantity imported from Mexico decreased from 1,800 tons to 900 tons as the price of tomatoes decreased from $2.50 to $2.00. The supply elasticity of tomatoes coming from Mexico is 3.0.
What does supply elasticity mean?
A good or service's responsiveness to supply after a change in its market price is measured by its price elasticity of supply. Basic economic theory states that when a good's price rises, its supply will also rise.
The following formula can be used to determine the supply's elasticity:
Elasticity is equal to [(Q2 - Q1)/(Q2 + Q1)/2)]. / [(P2 – P1) / ((P2 + P1) / 2)]
Alternatively, put another way: Elasticity is equal to (Q/Qave) / (P/Pave).
where Q and P, respectively, stand for quantity and price.
We are informed that
P1 equals $2.5 Q1 equals 1,800 tons
P2 equals $2 and Q2 equals 900 tons.
adding the specified values to the equation:
Elasticity is equal to [(900 - 1800)/(900 + 1800)/2)]. / [(2 – 2.5) / ((2 + 2.5) / 2)]
Elasticity is equal to (-900/1350)/(-0.5/2.25)
elastic factor = 3.
Positive elasticity means that the supply and price are inversely correlated.
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