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Value of the coefficient of price elasticity of supply

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Swee Yee is a producer of product A in city SDK. At the end of 2019, the total production was 25,000 units. During the COVID-19 pandemic, Swee Yee was forced to reduce production by 30 percent due to the bad economy conditions. The price of product A fell from RM15 to RM1 1 due to the reduction in quantity demanded from 24,500 units to 19,000 units. The average income of each SDK citizen has shown a decreasing trend from RM3,000 to RM2, 100 at the end of 2020.

(a) Calculate and interpret the value of the coefficient of price elasticity of supply for product A at the end of 2020.

(b) Calculate and interpret the value of the coefficient of income elasticity of demand for product A at the end of 2020.

Reference no: EM133133813

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