A. 2.00
B. 1.50
C. 1.00
D. 0.50
Correct Answer:
Option A = 2.00
Explanation
The price elasticity of supply = % change in quantity supplied / % change in price
% change in quantity supplied = 250 – 200 = 50
50/200 x 100 = 25
Therefore, price elasticity of supply = 25/12.5 = 2
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