Suppose the price elasticity of supply for rocking chairs is 1.2 and the price increases by 20%.The quantity supplied will increase by ________ %.
A)20
B)24
C)18
D)12

Question

Quizplus · Accepted Answer

The price elasticity of supply is 1.2, meaning that for every 1% increase in price, the quantity supplied increases by 1.2%. Therefore, a 20% increase in price will result in a 20% * 1.2 = 24% increase in quantity supplied.

Suppose the Price Elasticity of Supply for Rocking Chairs Is