A rise in the price of cabbage from $14 to $18 per bushel, caused by a shift of the demand curve, increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is

• A. 1.6
• B. 1.0
• C. 0.6
• D. 0.8

Answer: (A)

Elasticity of supply measures how much the quantity producers are willing to supply responds to a change in price. In this scenario, price rises from 14 to 18 per unit and quantity supplied increases from 4,000 to 6,000 bushels. Using arc (midpoint) percentages to compare relative changes: percent change in quantity supplied = (6,000 − 4,000) / [(6,000 + 4,000)/2] = 2,000 / 5,000 = 0.40 (40%), and percent change in price = (18 − 14) / [(18 + 14)/2] = 4 / 16 = 0.25 (25%). Elasticity of supply = 0.40 / 0.25 = 1.6. Since the elasticity is greater than 1, supply is elastic: quantity supplied responds more than proportionally to the price change. The fact that the price rise comes from a shift in demand doesn’t change the computation of how much quantity supplied responds to price; it just means the price move is externally driven, while the supply response to that price is still captured by this elasticity. The correct numerical value is 1.6.