When a 5 percent increase in price leads to an 8 percent increase in quantity supplied, supply is inelastic.

Name: When a 5 percent increase in price leads to an 8 percent increase in quantity supplied, supply is inelastic.
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Question

Quizplus · Accepted Answer

Based on the given information, the price elasticity of supply (PES) can be calculated as PES = (% change in quantity supplied) / (% change in price) = 8% / 5% = 1.6. Since this value is greater than 1, supply is elastic, not inelastic.

When a 5 Percent Increase in Price Leads to an 8