If the price of a good increases by 10 per cent and the quantity supplied increases by 5 per cent, then the elasticity of supply is
A) negative and supply is inelastic.
B) less than one and supply is inelastic.
C) greater than one and supply is elastic.
D) less than one and supply is elastic.
E) greater than one and supply is inelastic.

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated as the percentage change in the quantity supplied divided by the percentage change in the price. In this case, we have:
Elasticity of supply = (5% / 10%) = 0.5
Since the elasticity is less than one, we know that the supply is inelastic. So, the correct answer is B.

If the Price of a Good Increases by 10 Per