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
A) an elastic supply.
B) an inelastic supply.
C) a unit elastic supply.
D) an inelastic demand.
E) an elastic demand.

Question

Quizplus · Accepted Answer

An increase in price resulting in a proportionally larger increase in quantity supplied indicates that the product has an elastic supply. This means that producers are able to increase their output in response to a price increase.

Suppose a 20 Percent Increase in the Price of Gasoline