As the price of tomatoes fell from $2.5 to $2, the quantity imported from mexico fell from 1,800 tons to 900 tons. the elasticity of supply of tomatoes imported from mexico is: 0.25.

The elasticity of supply can be calculated using the formula:

Elasticity = [(Q2 – Q1) / ((Q2 + Q1) / 2)] / [(P2 – P1) / ((P2 + P1) / 2)]

or in simpler terms: Elasticity =(ΔQ / Qave) / (ΔP / Pave)

Where Q and P are the quantity and price respectively

We are given that:

P1 = $2.5                 Q1 = 1,800 tons

P2 = $2                    Q2 = 900 tons

Substituting the given values into the equation:

Elasticity = [(900 – 1800) / ((900 + 1800) / 2)] / [(2 – 2.5) / ((2 + 2.5) / 2)]

Elasticity = (-900 / 1350) / (-0.5 / 2.25)

Elasticity = 3.0

Since elasticity is positive, the supply is directly proportional to the price.

The answer is A. Yes, Cindy should hire 12th worker.

Explanation:

Please see the below for detailed calculations and explanations:

By increasing one employees, Cindy's cupcakes shop marginal cost per day will increase by the amount equals to the salary and benefit of the 12th in one day which is: $100;

The benefits brought back to Cindy's shop is the increase in marginal revenue of $150 ( calculated as $2,750 - $2,600).

As marginal revenue is higher than marginal cost in case the 12th employees is hired, Cindy should hire one more employees as it will increase her total profit at the end of the day by $50 ( i.e Marginal revenue - Marginal cost = 150 - 100 =$50).