In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was abouta. 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. b. 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. c. 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00. d. 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.

Question

Business

Maria Sherman

19 September, 12:49

In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was abouta. 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. b. 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. c. 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00. d. 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.

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Kaitlynn Sanders · Answer 1

The answers are:

When the price increased from $2.00 to $2.50 the PES was 1.5

When the price increased from $2.50 to $3.00 the PES was 1.36

Explanation:

The formula used to calculate price elasticity of supply (PES) is:

PES = [ (New Quantity Supplied - Old Quantity Supplied) / (Old Quantity Supplied) ] / [ (New Price - Old Price) / (Old Price) ]

PES = % change in quantity / % change in price

When the price increased from $2.00 to $2.50 the PES was:

PES = [ (110 - 80) / 80] / [ (2.50 - 2.00) / 2.00] = 1.5

When the price increased from $2.50 to $3.00 the PES was:

PES = [ (140 - 110) / 110] / [ (3.00 - 2.50) / 2.50] = 1.36