P ($/month)
$900
$800
$700
$600
$500
A
$400
$300
$200
$100
B
S
% change in quantity = \frac{13,000 - 10,000}{(13,000 + 10,000)/2} \times 100
= \frac{3,000}{11,500} \times 100
= 26.1
% change in price = \frac{$700 - $650}{($700 + $650)/2} \times 100
= \frac{50}{675} \times 100
= 7.4
Price Elasticity of Supply = \frac{26.1\%}{7.4\%}
= 3.53
5 10 15 20
Q (1,000s of rental units)
• The price elasticity of supply is calculated as the percentage
change in quantity divided by the percentage change in price.
• What category of elasticity does the result fall into?
