Question

suppose that the quantity supplied of beef decreased by 24% as a result of an 16% decrease in the price of beef. 1. from this information we can conclude that the implied price elasticity of supply is equal to 1.5. 2. this means that the supply of beef is elastic. 3. lets denote the absolute value of the elasticity you found as x. then we normally interpret the elasticity as follows: for every 1% decrease in price, 4....the quantity supplied of beef decrease by select select x% 24% 1% 16%

Explanation:

Step1: Recall elasticity formula

The formula for price - elasticity of supply ($E_s$) is $E_s=\frac{\%\text{ change in quantity supplied}}{\%\text{ change in price}}$.

Step2: Substitute given values

We are given that the $\%\text{ change in quantity supplied}=- 24\%$ and the $\%\text{ change in price}=-16\%$. So, $E_s=\frac{-24\%}{-16\%}=1.5$.

Step3: Determine elasticity type

If $E_s > 1$, supply is elastic. Since $E_s = 1.5>1$, the supply of beef is elastic.

Step4: Interpret elasticity

The price - elasticity of supply of 1.5 means that for every 1% decrease in price, the quantity supplied of beef decreases by 1.5% (because $E_s=\frac{\%\text{ change in quantity supplied}}{\%\text{ change in price}}$, so $\%\text{ change in quantity supplied}=E_s\times\%\text{ change in price}$).

Answer:

1. 1.5
2. elastic
3. 1%
4. 1.5% (X%)