Suppose an increase in the price of golf clubs from $75 to $125 leads to an increase in quantity supplied from 200 units to 300 units. The price elasticity of supply for golf clubs at the original price of $75 is ________, so supply is ________.
A)2; elastic
B)2; inelastic
C)4/3; elastic
D)3/4; inelastic

Question

Quizplus · Accepted Answer

The price elasticity of supply is the percentage change in quantity supplied
(ΔQ/Q)divided by the percentage change in price (ΔP/P). This can be expressed as (ΔQ/Q)/(ΔP/P)or (ΔQ/ΔP)× (P/Q). Using the last formula, we have (100/50)× (75/200), which yields 3/4 (or, 0.75), indicating that supply is inelastic with respect to price.

Suppose an Increase in the Price of Golf Clubs from $75