As the price of beachfront cottages in Florida was raised from 400,000 to 500,000 their quantity supplied rose from 2,000 to 2,100 Rounding to the nearest tenth, the elasticity of supply of beachfront cottages is: Select one: a. 0.2 b. 4.6. c. 0.4 d. 1.0

Question

As the price of beachfront cottages in Florida was raised from 400,000 to 500,000 their quantity supplied rose from 2,000 to 2,100 Rounding to the nearest tenth, the elasticity of supply of beachfront cottages is: Select one: a. 0.2 b. 4.6. c. 0.4 d. 1.0

Answer 1

To calculate the elasticity of supply, we can use the formula:Elasticity of supply = (Percentage change in quantity supplied) / (Percentage change in price)First, let's calculate the percentage change in quantity supplied:Percentage change in quantity supplied = (New quantity supplied - Old quantity supplied) / (Old quantity supplied) * 100Percentage change in quantity supplied = (2,100 - 2,000) / 2,000 * 100Percentage change in quantity supplied = 5%Next, let's calculate the percentage change in price:Percentage change in price = (New price - Old price) / (Old price) * 100Percentage change in price = (500,000 - 400,000) / 400,000 * 100Percentage change in price = 25%Now, we can calculate the elasticity of supply:Elasticity of supply = (Percentage change in quantity supplied) / (Percentage change in price)Elasticity of supply = 5% / 25%Elasticity of supply = 0.2Therefore, the correct answer is:a. 0.2

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As the price of beachfront cottages in Florida was raised from 400,000 to 500,000 their quantity supplied rose from 2,000 to 2,100 Rounding to the nearest tenth, the elasticity of supply of beachfront cottages is: Select one: a. 0.2 b. 4.6. c. 0.4 d. 1.0

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