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Answer :
Final answer:
The elasticity of supply for solar panels, given a 10% price increase and a 7% quantity supplied increase, is calculated to be 0.7.
Explanation:
The elasticity of supply measures how the quantity supplied of a good responds to a change in the price of that good. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. In the given scenario, there is a 10% increase in the price of solar panels, which leads to a 7% increase in the quantity of solar panels supplied.
To calculate the elasticity of supply for solar panels, we use the formula:
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
Substitute the given values:
Elasticity of Supply = (7 / 10) = 0.7
Hence, the elasticity of supply for solar panels is 0.7, using one decimal place.
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