Answer to Question #96425 in Economics for Sana

Question

Using the information provided,estimate the price elasticity of supply of central American robusta coffee at the end of 2013.
PES=
=15/16
=1.06 Elastic
Can you explain this more??

Answer 1

The price elasticity of supply $PES$  is the percentage change in quantity supplied divided by the percentage change in price

$$PES={\%\ change\ in\ quantity \over \% \ change \ in\ price}$$

The price elasticity of supply equals the slope of supply curve. Since the supply curve has positive slope therefore the price elasticity of supply is always positive. 

$$PES={16\% \over 15\%}=1.067>1$$

If $PES>1$ then price-elastic supply. The producers can increase production without a rise in cost or a time delay.