Explanation:

Here’s the thing: elasticity of supply is all about how much supply reacts when price moves. The formula is:

Elasticity of Supply (Es) = % change in quantity supplied / % change in price

- In this question, supply goes up by 27% when price rises by 8%.

- Plug those numbers in: Es = 27% / 8% = 3.375

Now, look at the options:

- Option 1: 1.5 (Nope—not matching the calculation)

- Option 2: 0.5 (Way too low)

- Option 3: 3.5 (Super close! 3.375 rounds up to 3.5)

- Option 4: 2.5 (Doesn’t fit)

So, the closest answer is Option 3: 3.5. That’s your green tick.

Option 3: 3.5

To sum up: elasticity isn’t just about the size of change, but the proportion. Here, the supply reacts a lot more than price, so the elasticity is high. 3.5 is the closest fit.