Question

You have been hired by the government of kenya, which produces a lot of coffee, to examine the supply of gourmet coffee beans. Suppose you discover that the price elasticity of supply is 0.85. When you share your information with the kenyan government, you explain that a price elasticity of supply is 0.85 means that:

Answer 1

A price elasticity of supply of 0.85 means that a one percent change in price would change the quantity supplied by 0.85%. This means that if the price of the coffee beans increased by 10%, the quantity supplied would increase by 8.5%.

Step-by-step explanation: