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16 April, 12:59

As the price of tomatoes fell from $2.5 to $2, the quantity imported from mexico fell from 1,800 tons to 900 tons. the elasticity of supply of tomatoes imported from mexico is: 0.25.

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  1. 16 April, 13:14
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    The elasticity of supply can be calculated using the formula:

    Elasticity = [ (Q2 - Q1) / ((Q2 + Q1) / 2) ] / [ (P2 - P1) / ((P2 + P1) / 2) ]

    or in simpler terms: Elasticity = (ΔQ / Qave) / (ΔP / Pave)

    Where Q and P are the quantity and price respectively

    We are given that:

    P1 = $2.5 Q1 = 1,800 tons

    P2 = $2 Q2 = 900 tons

    Substituting the given values into the equation:

    Elasticity = [ (900 - 1800) / ((900 + 1800) / 2) ] / [ (2 - 2.5) / ((2 + 2.5) / 2) ]

    Elasticity = (-900 / 1350) / (-0.5 / 2.25)

    Elasticity = 3.0

    Since elasticity is positive, the supply is directly proportional to the price.
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