Question

Suppose that the price of African safaris fell from $4,000 to $3,200 per person, and, as a result, tour operators reduced the number of trips offered by 25%. Using the midpoint method, the price elasticity of supply for African safaris is _____.

Answer 1

Answer:

Explanation:

% change in price = 3200-4000/ [(3200+4000)/2] * 100 = -800/7200 *200 = -200/9=-22.22%

The price elasticity of supply=25/22=1.13