Paper 2 · Elasticity of Demand and Supply

The price of electricity rose from $1,00 per kilowatt to$ 1,20 per kilowatt, and the quantity supplied rose by 40 percent. Calculate the price elasticity of supply.

Model answer

Also accepted: 2.0, 2,0, +2

Explanation: The percentage change in price is (1,20 minus 1,00) divided by 1,00, times 100, which is 20 percent. Price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price, so 40 divided by 20 gives 2.

Derived from ZIMSEC Economics 4050/2 Paper 2, June 2023, Q1

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The price of electricity rose from 1,00perkilowattto1,00 per kilowatt to 1,00perkilowattto1,20 per kilowatt, and the quantity supplied rose by 40 percent. Calculate the price elasticity of supply.

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The price of electricity rose from $1,00 per kilowatt to$ 1,20 per kilowatt, and the quantity supplied rose by 40 percent. Calculate the price elasticity of supply.