If a 40% change in price results in a 25% change in quantity supplied,then the price elasticity of supply is
A) 0.63,and supply is elastic.
B) 0.63,and supply is inelastic.
C) 1.60,and supply is elastic.
D) 1.60,and supply is inelastic.

Question

Quizplus · Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, it is 25% / 40% = 0.625, which is approximately 0.63. Since it is less than 1, supply is inelastic.

If a 40% Change in Price Results in a 25