Answer:
1.875
Explanation:
Data provided in the question:
Initial price, P₁ = $70
Final price, P₂ = $80
Initial supply quantity = $35,000
Final supply quantity = $45,000
Now,
Price elasticity of supply for tires = [tex]\frac{(\frac{Q_2-Q_1}{\frac{Q_2+Q_1}{2}})}{(\frac{P_2-P_1}{\frac{P_2+P_1}{2}})}[/tex]
on substituting the respective values, we get
Price elasticity of supply for tires = [tex]\frac{(\frac{45,000-35,000}{\frac{45,000+35,000}{2}})}{(\frac{80-70}{\frac{80+70}{2}})}[/tex]
or
Price elasticity of supply for tires = [tex]\frac{\frac{10,000}{\frac{80,000}{2}}}{\frac{10}{\frac{150}{2}}}[/tex]
or
Price elasticity of supply for tires = [ 0.25 ÷ 0.1333 ]
= 1.875
