The price elasticity of gasoline supply in the U.S. is 0.4. If the price of gasoline rises by 8%, what is the expected change in the quantity of gasoline supplied in the U.S.?
A) +3.2%
B) -3.2%
C) +32.0%
D) +0.32%

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Given an elasticity of 0.4 and a price increase of 8%, the expected change in quantity supplied is 0.4 * 8% = 3.2%.

The Price Elasticity of Gasoline Supply in the U