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 select 3. let’s denote the absolute value of the normally interpret the elasticity as fol select 4. _the quantity supplied of beef decrease by select

Explanation:

Step1: Recall price - elasticity of supply 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

Given that $\%\text{ change in quantity supplied}=- 24\%$ and $\%\text{ change in price}=-16\%$. Then $E_s=\frac{-24\%}{-16\%}=1.5$.

Step3: Determine elasticity type

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

Answer:

1. 1.5
2. elastic
3. When $|E_s|>1$, a percentage - change in price leads to a larger percentage - change in quantity supplied in the same direction.
4. A 1% decrease in the price of beef leads to a 1.5% decrease in the quantity supplied of beef.