Calculating Price Elasticity of Supply

The video tutorial explains the concept of price elasticity of supply and how to calculate it using a simple three-step process. It covers the formula for price elasticity, the meaning of proportionate change, and provides examples with both small and large numbers to illustrate the calculation process. The tutorial emphasizes the importance of understanding the steps and applying them to different scenarios.

What is the formula for calculating the price elasticity of supply?

• Proportionate change in price divided by proportionate change in quantity supplied

• Proportionate change in quantity supplied divided by proportionate change in price

• Actual change in price divided by actual change in quantity supplied

• Actual change in quantity supplied divided by actual change in price

What is the first step in the three-step process for calculating price elasticity of supply?

• Divide the change in quantity by the change in price

• Determine the changes in quantity supplied and price

• Find the proportionate change in price

• Calculate the elasticity directly

In the simple example, what is the change in quantity supplied when the price increases from 20 to 22?

• 25 units

• 20 units

• 10 units

• 15 units

What is the calculated price elasticity of supply for the simple example provided?

• 4

• 3

• 2

• 1

In the complex example, what is the change in price when it increases from £8.3 million to £8.9 million?

• £800,000

• £700,000

• £600,000

• £500,000

What is the initial quantity supplied in the complex example involving luxury yachts?

• 30 yachts

• 35 yachts

• 40 yachts

• 45 yachts

What is the final calculated price elasticity of supply for the luxury yacht example?

• 0.69

• 0.59

• 0.89

• 0.79