If a 2 percent increase in price results in a 1 percent increase in the quantity supplied, the price elasticity of supply is 2.

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The price elasticity of supply in this scenario would be 0.5, not 2. Price elasticity of supply measures the responsiveness of quantity supplied to a change in price, and is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, a 2 percent increase in price results in a 1 percent increase in quantity supplied, which translates to a price elasticity of supply of (1%/2%) = 0.5.

If a 2 Percent Increase in Price Results in a 1