The supply of product X is elastic if the price of X rises by
A)1 percent and quantity supplied rises by 5 percent.
B)4 percent and quantity supplied rises by 4 percent.
C)8 percent and quantity supplied remains the same.
D)10 percent and quantity supplied rises by 2 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. A supply is considered elastic if the percentage change in quantity supplied is greater than the percentage change in price. In option A, a 1 percent increase in price leads to a 5 percent increase in quantity supplied, indicating an elastic supply.

The Supply of Product X Is Elastic If the Price