Final answer:
The price elasticity of supply measures how responsive the quantity supplied is to changes in price. It is calculated using the formula ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2)). When moving from a price of 4 to a price of 7, we can calculate the elasticity.
Step-by-step explanation:
The price elasticity of supply is a measure of how responsive the quantity supplied is to changes in price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, we are moving from a price of 4 to a price of 7.
Use the formula: elasticity = ((Q2 - Q1) / ((Q2 + Q1) / 2)) / ((P2 - P1) / ((P2 + P1) / 2))
Substitute the values: elasticity = ((7 - 4) / ((7 + 4) / 2)) / ((4 - 7) / ((4 + 7) / 2))
Simplify the equation to find the elasticity.