Asked by RMerline Benjamin on Jun 25, 2024
Verified
If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.
Price Elasticity
A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the sensitivity of consumers to price changes.
Quantity Supplied
The total amount of a specific good or service that is available to consumers at a given price point and time.
Ice Cream
A sweet, frozen dessert made from a combination of dairy products, sweeteners, and flavorings.
- Learn about the price elasticity of supply and how it is calculated.
Verified Answer
LS
lissette saraibaJun 28, 2024
Final Answer :
True
Explanation :
The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, a 20% increase in quantity supplied divided by a 10% increase in price gives an elasticity of 2.
Learning Objectives
- Learn about the price elasticity of supply and how it is calculated.