Ceteris paribus, if a 4% increase in price leads to a 6% increase in the quantity supplied, then:
A)supply is elastic.
B)supply is unit elastic.
C)supply is inelastic.
D)the supply curve is perfectly vertical.

Question

Ceteris paribus, if a 4% increase in price leads to a 6% increase in the quantity supplied, then:
A)​supply is elastic.
B)​supply is unit elastic.
C)​supply is inelastic.
D)​the supply curve is perfectly vertical.

Quizplus · Accepted Answer

When a small change in price leads to a relatively larger change in the quantity supplied, then supply is said to be elastic. In this case, a 4% increase in price leads to a 6% increase in the quantity supplied, which indicates that supply is responsive to the price changes, and hence, it is elastic.

Ceteris Paribus, If a 4% Increase in Price Leads to a 6