If the price elasticity of supply is 4, an increase in the price of Good X by 5 percent causes the quantity supplied of it to:
A) rise 20 percent.
B) fall 20 percent.
C) rise 1.25 percent.
D) fall 1.25 percent.

Question

Quizplus · Accepted Answer

If the price elasticity of supply is 4, a 5% increase in price will cause a 20% increase in quantity supplied (4 x 5% = 20%). Therefore, the answer is A.

If the Price Elasticity of Supply Is 4, an Increase