Ceteris paribus, if a 4 percent increase in price leads to a 6 percent increase in the quantity supplied, then which of the following best describes the supply?
A) The supply is elastic.
B) The supply is unit elastic.
C) The supply curve is perfectly vertical.
D) The supply is inelastic.

Question

Quizplus · Accepted Answer

The fact that a small increase in price results in a greater percentage increase in quantity supplied indicates that the supply is responsive to price changes. This responsiveness is characteristic of an elastic supply. Therefore, option A is the correct choice.

Ceteris Paribus, If a 4 Percent Increase in Price Leads