Question
Is the calculation correct It seems there is an extra division by 2? Let's consider the market for soybeans in Brazil. According to a report
Is the calculation correct It seems there is an extra division by 2?
Let's consider the market for soybeans in Brazil. According to a report by the United States Department of Agriculture, the price of soybeans in Brazil was $13.25 per bushel in February 2021. Suppose that the price of soybeans increases to $14.00 per bushel, and as a result, the quantity supplied of soybeans increases from 120 million bushels to 140 million bushels. Using the formula for price elasticity of supply, we can calculate the price elasticity of supply for soybeans as: % change in quantity supplied / % change in price = (140 - 120) / ((140 + 120) / 2) / (14.00 - 13.25) / ((14.00 + 13.25) / 2) = 1.33 This means that for a 1% increase in the price of soybeans, there is a 1.33% increase in the quantity supplied of soybeans. In other words, the supply of soybeans is relatively elastic
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started