Grape juice prices increased by 20 percent in 2007. Suppose in response grape growers did not increase or decrease their grape production. The elasticity of supply is best described as
A) perfectly inelastic.
B) perfectly elastic.
C) inelastic.
D) elastic.

Question

Quizplus · Accepted Answer

The elasticity of supply is perfectly inelastic when the quantity supplied does not change in response to a change in price. Since grape growers did not change their production despite the price increase, the supply is perfectly inelastic.

Grape Juice Prices Increased by 20 Percent in 2007