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Homework answers / question archive / A 40% increase in price led the quantity supplied of bicycles in a competitive market to increase from 300

A 40% increase in price led the quantity supplied of bicycles in a competitive market to increase from 300

Economics

A 40% increase in price led the quantity supplied of bicycles in a competitive market to increase from 300.00 to 330.00. What is the price elasticity of supply for bicycles?

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The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price. The percentage change in quantity supplied is:

  • (330 - 300) / 300 = 10%

Thus the price elasticity of supplied is:

  • 10% / 40% = 0.25

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