If price of a commodity rises from N2.00 to N4.00 and its supply increases from 100 to 125, them the co-efficient of elasticity of supply is

If price of a commodity rises from N2.00 to N4.00 and its supply increases from 100 to 125, them the co-efficient of elasticity of supply is

Answer Details

The co-efficient of elasticity of supply measures the responsiveness of quantity supplied of a commodity to a change in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. Using the given values, the percentage change in price is: ((4 - 2)/2) x 100% = 100% The percentage change in quantity supplied is: ((125 - 100)/100) x 100% = 25% Therefore, the co-efficient of elasticity of supply is: 25% ÷ 100% = 0.25 So, the correct answer is 0.25.