Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is ________ so supply is ________.
A)2/3; elastic
B)2/3; inelastic
C)3/2; elastic
D)3/2; inelastic

Question

Quizplus · Accepted Answer

The price elasticity of supply is the percentage change in quantity supplied
(ΔQ/Q)divided by the percentage change in price (ΔP/P). This can be expressed as (ΔQ/Q)/(ΔP/P)or (ΔQ/ΔP)× (P/Q). Using the last formula, we have (50/1)× (3/100), which yields 3/2 (or, 1.5), indicating that supply is elastic with respect to price.

Suppose an Increase in the Price of Hamburger from $3