Question

From the data shown in the table below about supply of alarm clocks, calculate the price elasticity of supply from:

1. point J to point K

2. point L to point M

3. point N to point P

Point	Price	Quantity Supplied
J	$8	50
K	$9	70
L	$10	80
M	$11	88
N	$12	95
P	$13	100

Answer 1

1. Between point J to K

Price elasticity of supply = %age change in QS / %age change in Price

Here,

%age change in QS = Q2 – Q1 / Q1 * 100 = 70 – 50 / 50 * 100 = 40%

%age change in Price = P2 – P1 / P1 * 100 = 9-8 / 8 * 100 = 12.5%

Now, PES = 40 / 12.5 = 3.2

2. Between point L and M

Price elasticity of supply = %age change in QS / %age change in Price

Here,

%age change in QS = Q2 – Q1 / Q1 * 100 = 88-80 / 80 * 100 = 10%

%age change in Price = P2 – P1 / P1 * 100 = 11-10/10 * 100 = 10%

Now, PES = 10/10 = 1

3. Between point N and P

Price elasticity of supply = %age change in QS / %age change in Price

Here,

%age change in QS = Q2 – Q1 / Q1 * 100 = 100-95 / 95 * 100 = 5.26%

%age change in Price = P2 – P1 / P1 * 100 = 13-12/12 * 100 = 8.33%

Now, PES = 5.26 / 8.33 = 0.63