If the price of cocoa rises by 20 percent, the quantity supplied of cocoa rises by 4 percent. What is the elasticity of supply?
A) 5
B) 2
C) 0.2
D) 0.008

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. In this case, the percentage change in quantity supplied is 4% and the percentage change in price is 20%. Therefore, the elasticity of supply is 4% / 20% = 0.2.

If the Price of Cocoa Rises by 20 Percent, the Quantity