Suppose that the price elasticity of supply of lawn mowers is 1.5. If the price of lawn mowers rises 5 per cent, the quantity supplied of lawn mowers would
A) decline 7.5 per cent.
B) rise 7.5 per cent.
C) rise 1.5 per cent.
D) rise 0.3 per cent.

Question

Quizplus · Accepted Answer

The price elasticity of supply is 1.5, meaning that for a 1% increase in price, the quantity supplied increases by 1.5%. Therefore, a 5% increase in price would lead to a 7.5% increase in quantity supplied (1.5 * 5% = 7.5%).

Suppose That the Price Elasticity of Supply of Lawn Mowers