Elasticity of supply, Suppose that the price of peanut packets increases by 5 %, the

Elasticity of supply

Suppose that the price of peanut packets increases by 5 %, the quantity supplied of peanut increases by 8 %. Then what is the elasticity of supply?

Answer: Es = Percentage Change in quantity supplied/percentage change in Price
= 8/5
= 1.6 (Therefore the supply is elastic)

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