Question

Qs = 5P - 25

When Qs = 100, find the (price) elasticity of supply

When Qs = 200, find the (price) elasticity of supply

Answer 1

Answer:
When Qs = 100, Es = , (125/100) = 1.25
When Qs = 200, Es = (225/200) = 1.13

Elasticity of supply(Es) at a point can be found by the formula: (Intercept on x-axis)/(quantity supplied)
Intercept on x-axis can be found with suppy sunction when P = 0.
Qs = 5P - 25; When P = 0, Qs = -25

So, when Qs = 100, Es = , (125/100) = 1.25
When Qs = 200, Es = 225/200 = 1.13

This can be verified with the percenetage method:

When Qs changes from 100 to 200:
Es = (100%)/(80%) = 1.25
When Qs changes from 200 to 100:
Es = (50%)/(44.44%) = 1.13