If elasticity for a product is 2 and supply increases by 10 percent,what was the percent price change for this product?
A)an increase of 2 percent
B)a decrease of 2 percent
C)an increase of 10 percent
D)a decrease of 5 percent
E)an increase of 5 percent

Question

Quizplus · Accepted Answer

Elasticity of 2 means that for every 1% change in price, the quantity supplied changes by 2%. If supply increases by 10%, the price must have increased by 5% to maintain this elasticity.

If Elasticity for a Product Is 2 and Supply Increases