Refer to the figure below. If the price rises from $10 to $14, what will happen to the price elasticity of supply?
A)It increases.
B)It decreases.
C)It stays the same.
D)This cannot be determined from the information provided.

Question

Refer to the figure below. If the price rises from $10 to $14, what will happen to the price elasticity of supply? 
A)It increases. 
B)It decreases. 
C)It stays the same. 
D)This cannot be determined from the information provided.

Quizplus · Accepted Answer

When the price rises from $10 to $14, the quantity supplied may not be able to increase proportionately due to constraints such as limited resources, production capacity, and time. As a result, the price elasticity of supply is likely to decrease, implying that suppliers become less responsive to price changes. When the elasticity is lower than 1, the percentage change in quantity supplied is less than the percentage change in price, indicating an inelastic supply.

Refer to the Figure Below