If the price elasticity of supply is 4, an increase in the price of Good X by 5 percent:
A) causes the quantity supplied of Good X to rise 20 percent.
B) causes the quantity supplied of Good X to fall 20 percent.
C) causes the quantity supplied of Good X to rise 1.25 percent.
D) causes the quantity supplied of Good X to fall 1.25 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 4, a 5% increase in price results in a 20% increase in quantity supplied (4 * 5% = 20%).

If the Price Elasticity of Supply Is 4, an Increase