Suppose a 20 percent increase in the price of gasoline results in a 25 percent increase in the quantity supplied.This response means that gasoline has an
A) elastic supply.
B) inelastic supply.
C) unit elastic supply.
D) inelastic demand.
E) elastic demand.

Question

Quizplus · Accepted Answer

The percentage increase in quantity supplied (25%) is greater than the percentage increase in price (20%), indicating that the supply of gasoline is sensitive and responsive to changes in price. This is characteristic of elastic supply.

Suppose a 20 Percent Increase in the Price of Gasoline