Refer to the accompanying figure. If the price rises from $10 to $14, what will happen to the price elasticity of supply?
A)It increases.
B)It decreases.
C)It stays the same.
D)This cannot be determined from the information provided.

Question

Refer to the accompanying figure. If the price rises from $10 to $14, what will happen to the price elasticity of supply? 
A)It increases. 
B)It decreases. 
C)It stays the same. 
D)This cannot be determined from the information provided.

Quizplus · Accepted Answer

The price elasticity of supply computed as (P/Q)× (1/slope). Note that as price rises from $10 to $14, P/Q falls, and since slope is constant along a linear supply curve, this implies that the price elasticity of supply falls as price rises from $10 to $14.

Refer to the Accompanying Figure