A marketing student observes that when the price of ice cream rises by 10 percent, the quantity of ice cream a supplier is willing to sell rises by 5 percent. The student correctly concludes that the elasticity of supply for ice cream is:
A) .2.
B) .5.
C) 2.
D) 5.

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, it is 5% / 10% = 0.5.

A Marketing Student Observes That When the Price of Ice