Question

SECTION A - 1(a) The supply situation for rice in country x over a period is shown in the table below:
Period: December 2004, Price $30, Quantity supplied 100 bags | January 2007, Price $40, Quantity supplied 150 bags | April 2009, Price $50, Quantity supplied 160 bags.
Calculate the co-efficient of price elasticity of supply for rice between December 2004 and January 2007.

Accepted Answer

Elasticity of supply of rice measures the degree of responsiveness in quantity supplied of rice to a change in price. Formula: %change in quantity of rice / %change in price of rice = %Δq/%Δp.
Between 2004 and 2007: %Δq = (150-100)/100 x 100 = 50%. %Δp = (40-30)/30 x 100 = 33.3%.
Coefficient of elasticity = 50/33.3 = 1.5.

WAEC Economics 2011 Theory — Question 1

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