Suppose that when price is $10, quantity supplied is 20. When price is $6, quantity supplied is 12 units. The price elasticity of supply is:
A) 0.5.
B) 0.8.
C) 1.0.
D) 1.5.
E) 2.0.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated using the formula: (percentage change in quantity supplied) / (percentage change in price). The percentage change in quantity supplied is (12-20)/20 = -0.4, and the percentage change in price is (6-10)/10 = -0.4. Thus, the elasticity is -0.4 / -0.4 = 1.0.

Suppose That When Price Is $10, Quantity Supplied Is 20