If the price elasticity of supply is 0.2,and a price increase led to a 3% increase in quantity supplied,then the price increase is about
A) 0.07%.
B) 0.60%.
C) 6%.
D) 15%.

Question

Quizplus · Accepted Answer

The price elasticity of supply formula is percentage change in quantity supplied divided by percentage change in price. Rearranging gives percentage change in price = percentage change in quantity supplied / elasticity. So, 3% / 0.2 = 15%.

If the Price Elasticity of Supply Is 0