If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units, the elasticity of supply is
A)0.5.
B)0.8.
C)1.0.
D)2.0.
E)20.0.

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. The percentage change in quantity supplied is ((6000-4000)/4000) = 0.5 or 50%, and the percentage change in price is ((11-9)/9) = 0.222 or 22.2%. Thus, the elasticity of supply is 0.5/0.222 = 2.25, which is closest to 2.0.

If a Rise in the Price of Good a from $9