The price elasticity of supply is usually a positive number because:
A)quantity supplied increases in response to income increases.
B)quantity supplied increases in response to price increases.
C)the quantity demanded usually rises when price falls, and therefore suppliers would want to capitalise on this increase in demand.
D)price rises when supply increases.

Question

Quizplus · Accepted Answer

The price elasticity of supply measures the degree of responsiveness of the quantity supplied to a change in price. If the quantity supplied increases when the price increases, then the price elasticity of supply is positive. Therefore, option B is the correct answer. Option A refers to income elasticity of demand, option C refers to price elasticity of demand, and option D is contradictory to the definition of price elasticity of supply.

The Price Elasticity of Supply Is Usually a Positive Number