Question

Helen's Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar, so the price elasticity of supply over this price range is 1.4. a. True b. False

Answer 1

Answer:

False.

Step-by-step explanation:

Given that,

When price of honey = $6 per jar then the supply = 20 jars of honey

When price of honey = $8 per jar then the supply = 30 jars of honey

Therefore,

Elasticity of supply:

$=\frac{Change\ in\ quantity}{Change\ in\ price}\times\frac{Initial\ price}{Initial\ quantity}$

$=\frac{(30-20)}{(8-6)}\times\frac{6}{20}$

$=\frac{10}{2}\times\frac{6}{20}$

      = 1.5

Therefore, the statement is false.