If the price of aluminum increases 4 percent, and the quantity supplied increases by 1 percent, what is the price elasticity of supply?
A) -4.0
B) 4.0
C) 0.25
D) 3.0

Question

Quizplus · Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price.

In this case: 
% change in price = 4% 
% change in quantity supplied = 1%

Price elasticity of supply = (% change in quantity supplied) / (% change in price) 
= 1% / 4% 
= 0.25

Therefore, the price elasticity of supply is 0.25, making choice C the correct answer.

If the Price of Aluminum Increases 4 Percent, and the Quantity