Answered: Suppose the price of tomatoes fell from…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the price of tomatoes fell from $58 a crate to $22 a crate a typical tomato farmer supplies 308 crates of tomatoes a day at $58 a crate but at $22 a crate would supply 92 crates a day what is the price elasticity of supply of tomatoes

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Price elasticity of supply is a widely applied concept in economics to study the sensitivity of the supply of a good or service in relation to the change in the price of that good or service. The supply of a product increases when its price increase and reduce when the price also reduces. Price elasticity is useful not only for businesses but also for investors as it helps them to decide whether or not to invest in a company because a company with an elastic supply is a safe option for investment rather than a company with an inelastic supply.

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