The price elasticity of supply of hot dog buns is estimated to be 1.5.Holding everything else constant, this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by
A)1.5 percent.
B)15 percent.
C)approximately 25 percent.
D)approximately 5 percent.

Question

Quizplus · Accepted Answer

The price elasticity of supply formula is:
Elasticity of supply = % change in quantity supplied / % change in price
Given that the price elasticity of supply of hot dog buns is 1.5, a 10% decrease in the price of hot dog buns would result in a 15% decrease in the quantity of hot dog buns supplied (1.5 x 10 = 15). Therefore, the answer is B.

The Price Elasticity of Supply of Hot Dog Buns Is