The image contains an economic problem related to the supply and demand of a good, illustrated through mathematical equations.### Problem Description:Suppose that the supply and demand of a good are given by the following equations:- **Demand Equation:** $ Q_D = 75 - \frac{3}{4}P $- **Supply Equation:** $ Q_S = -5 + \frac{5}{4}P $### Question:What is the elasticity of supply?### Answer Options:a. $\frac{5}{4}$ b. $\frac{10}{9}$ c. $\frac{3}{4}$ d. $\frac{11}{8}$ The correct answer is highlighted as option b. $\frac{10}{9}$. There are no graphs or diagrams in this image.

Answered: What is the elasticity of supply? O a.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The image contains an economic problem related to the supply and demand of a good, illustrated through mathematical equations.

### Problem Description:
Suppose that the supply and demand of a good are given by the following equations:

- **Demand Equation:** $ Q_D = 75 - \frac{3}{4}P $
- **Supply Equation:** $ Q_S = -5 + \frac{5}{4}P $

### Question:
What is the elasticity of supply?

### Answer Options:
a. $\frac{5}{4}$
b. $\frac{10}{9}$
c. $\frac{3}{4}$
d. $\frac{11}{8}$

The correct answer is highlighted as option b. $\frac{10}{9}$. There are no graphs or diagrams in this image.

Expert Solution

Step 1: Elasticity of supply definition

Price elasticity of supply: - Price elasticity of supply measures the responsiveness of change in quantity supplied due to change in its price. There is a direct relation between quantity supplied and its price which means quantity supply increases when the price of that good increases and quantity supplied decreases when the price decreases.

$Price space elasticity space of space supply left parenthesis straight E subscript straight S right parenthesis equals straight P over straight Q cross times dQ over dP$

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