As the price of tomatoes fell from $2.5 to $2, the quantity imported from mexico fell from 1,800 tons to 900 tons. the elasticity of supply of tomatoes imported from mexico is: 0.25.

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Business

Trace Wagner

10 May, 23:19

As the price of tomatoes fell from $2.5 to $2, the quantity imported from mexico fell from 1,800 tons to 900 tons. the elasticity of supply of tomatoes imported from mexico is: 0.25.

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Teagan Morris · Answer 1

The elasticity of supply can be calculated using the formula:

Elasticity = [ (Q2 - Q1) / ((Q2 + Q1) / 2) ] / [ (P2 - P1) / ((P2 + P1) / 2) ]

or in simpler terms: Elasticity = (ΔQ / Qave) / (ΔP / Pave)

Where Q and P are the quantity and price respectively

We are given that:

P1 = $2.5 Q1 = 1,800 tons

P2 = $2 Q2 = 900 tons

Substituting the given values into the equation:

Elasticity = [ (900 - 1800) / ((900 + 1800) / 2) ] / [ (2 - 2.5) / ((2 + 2.5) / 2) ]

Elasticity = (-900 / 1350) / (-0.5 / 2.25)

Elasticity = 3.0

Since elasticity is positive, the supply is directly proportional to the price.