The supply of product X is elastic if the price of X rises by
A)5 percent and quantity supplied rises by 7 percent.
B)8 percent and quantity supplied rises by 8 percent.
C)10 percent and quantity supplied remains the same.
D)7 percent and quantity supplied rises by 5 percent.

Question

Quizplus · Accepted Answer

The elasticity of supply measures how much the quantity supplied of a good responds to a change in the price of that good. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. If the percentage change in quantity supplied is greater than the percentage change in price, the supply is considered elastic. In option A, a 5 percent increase in price leads to a 7 percent increase in quantity supplied, indicating an elastic supply.

The Supply of Product X Is Elastic If the Price