When the price of socks was $\$ 4$ per pair, Theo's Sock-Stravaganza supplied 10,000 pairs of socks. When the price of socks was $\$ 5$ per pair, it supplied 17,500 pairs of socks.

What is the price elasticity of supply for socks?
Choose 1 answer:
(A) 2.4
(B) 0.33
(C) 3
(D) 7
(E) 1.5

Question

When the price of socks was $\$ 4$ per pair, Theo's Sock-Stravaganza supplied 10,000 pairs of socks. When the price of socks was $\$ 5$ per pair, it supplied 17,500 pairs of socks.

What is the price elasticity of supply for socks?
Choose 1 answer:
(A) 2.4
(B) 0.33
(C) 3
(D) 7
(E) 1.5

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Price Elasticity of Supply: The price elasticity of supply (PES) measures the responsiveness of the quantity supplied of a good to a change in its price. It is calculated using the formula: $PES = \frac{\% \Delta Q_s}{\% \Delta P}$ ‖ ‖ b ⋮ Calculate Percentage Change in Quantity Supplied: The initial quantity supplied ($Q_1$) is 10,000 pairs, and the new quantity supplied ($Q_2$) is 17,500 pairs. The percentage change in quantity supplied is calculated as: $\% \Delta Q_s = \frac{Q_2 - Q_1}{Q_1} imes 100 = \frac{17,500 - 10,000}{10,000} imes 100 = 75\%$ ‖ ‖ c ⋮ Calculate Percentage Change in Price: The initial price ($P_1$) is $4, and the new price ($P_2$) is $5. The percentage change in price is calculated as: $\% \Delta P = \frac{P_2 - P_1}{P_1} imes 100 = \frac{5 - 4}{4} imes 100 = 25\%$ ‖ ‖ d ⋮ Calculate Price Elasticity of Supply: Using the formula for PES, we get: $PES = \frac{\% \Delta Q_s}{\% \Delta P} = \frac{75\%}{25\%} = 3$ ‖ ∻Answer∻ ⚹ C) 3 ⚹ ∻Key Concept∻ ⚹ Price Elasticity of Supply (PES) ⚹ ∻Explanation∻ ⚹ The price elasticity of supply measures how much the quantity supplied of a good responds to a change in its price. In this case, the PES for socks is 3, indicating that the quantity supplied is highly responsive to price changes. ⚹◊What is the formula for calculating the price elasticity of supply in this scenario⍭ Generate me a similar question◊

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