If the price of cocoa rises by 10 percent and the elasticity of supply is 0.5, then the quantity supplied:
A) increases by 5 percent.
B) increases by 20 percent.
C) decreases by 5 percent.
D) decreases by 20 percent.

Question

Quizplus · Accepted Answer

If the elasticity of supply is 0.5, that means a 10 percent increase in price will result in a 5 percent increase in quantity supplied (0.5 x 10 percent).

If the Price of Cocoa Rises by 10 Percent and the Elasticity