Suppose the price elasticity of supply for how-to books is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for how-to books causes the price of how-to books to increase by 20%,then the quantity supplied of how-to books will increase by
A) 0.67% in the short run and 0.17% in the long run.
B) 3% in the short run and 1.2% in the long run.
C) 6% in the short run and 24% in the long run.
D) 66.7% in the short run and 16.7% in the long run.

Question

Quizplus · Accepted Answer

In the short run, with a price elasticity of supply of 0.3, a 20% price increase leads to a 6% increase in quantity supplied (0.3 * 20%). In the long run, with an elasticity of 1.2, the same price increase leads to a 24% increase in quantity supplied (1.2 * 20%).

Suppose the Price Elasticity of Supply for How-To Books Is