If for a particular market a drop in price from $100 to $50 causes quantity supplied to decrease from 3 million to 2 million units we can say that supply:
A)is elastic
B)is inelastic
C)is perfectly inelastic
D)is perfectly elastic
E)has a price elasticity whose numerical value is exactly equal to one

Question

Quizplus · Accepted Answer

The price elasticity of supply (PES) is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, the quantity supplied decreases by 33.33% ([3-2]/3) when the price decreases by 50% ([100-50]/100), resulting in a PES less than 1, indicating inelastic supply.

If for a Particular Market a Drop in Price from $100