If the quantity of rental units increases by 10 percent when the monthly rental price doubles, the supply of rental units, other factors held constant, is:
A) elastic.
B) inelastic.
C) perfectly elastic.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

The supply of rental units is considered inelastic because the percentage increase in quantity supplied (10 percent) is less than the percentage increase in price (doubling, or a 100 percent increase), indicating a less than proportional response in quantity supplied to a price change.

If the Quantity of Rental Units Increases by 10 Percent