With price rising from $1 to $2 and quantity rising from 80 to 320, the elasticity consistent with the data is about 1.8 for which of the following?

With price rising from $1 to $2 and quantity rising from 80 to 320, the elasticity consistent with the data is about 1.8 for which of the following?

• A. Demand for roses is about 1.8.
• B. Supply of roses is about 1.8.
• C. Demand for roses is about 0.55.
• D. Supply of roses is about 0.55.

Answer: (B)

Elasticity of supply measures how much quantity supplied responds to a price change. Here, price doubles from 1 to 2 while quantity supplied jumps from 80 to 320, so supply is the relevant side of the market. Use arc (midpoint) elasticity because the change is sizable. Calculate percent changes using the midpoint: - Price percent change = (2 − 1) / [(2 + 1)/2] = 1 / 1.5 ≈ 0.6667 (66.7%) - Quantity percent change = (320 − 80) / [(320 + 80)/2] = 240 / 200 = 1.2 (120%) Elasticity of supply = 1.2 / 0.6667 ≈ 1.8. The positive, substantial elasticity (about 1.8) indicates quantity supplied is quite responsive to price increases, which aligns with supply, not demand. The other options either attribute the elasticity to demand (which would move inversely with price) or give a magnitude not supported by this data.

Elasticity of supply measures how much quantity supplied responds to a price change. Here, price doubles from 1 to 2 while quantity supplied jumps from 80 to 320, so supply is the relevant side of the market. Use arc (midpoint) elasticity because the change is sizable.

Calculate percent changes using the midpoint:

• Price percent change = (2 − 1) / [(2 + 1)/2] = 1 / 1.5 ≈ 0.6667 (66.7%)

• Quantity percent change = (320 − 80) / [(320 + 80)/2] = 240 / 200 = 1.2 (120%)

Elasticity of supply = 1.2 / 0.6667 ≈ 1.8.

The positive, substantial elasticity (about 1.8) indicates quantity supplied is quite responsive to price increases, which aligns with supply, not demand. The other options either attribute the elasticity to demand (which would move inversely with price) or give a magnitude not supported by this data.