If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is ________ and the elasticity of supply is ________.
A) inelastic; 0.5
B) inelastic; 2.0
C) elastic; 0.5
D) elastic; 2.0

Question

Quizplus · Accepted Answer

The elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, it is 10% / 5% = 2.0, which is greater than 1, indicating that the supply is elastic.

If a 5 Percent Change in the Price of a Good