Suppose that the price elasticity of supply for oil is 0.1. Then, if the price of oil rises by 20 percent, the quantity of oil supplied will increase
A) by 200 percent.
B) by 20 percent.
C) by 2 percent.
D) by 0.2 percent.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. With an elasticity of 0.1 and a price increase of 20%, the quantity supplied increases by 0.1 * 20% = 2%.

Suppose That the Price Elasticity of Supply for Oil Is