If the price elasticity of supply is 2.5,we know that it is
A) perfectly elastic.
B) perfectly inelastic.
C) unitary elastic.
D) relatively inelastic.
E) relatively elastic.

Question

Quizplus · Accepted Answer

A price elasticity of supply of 2.5 indicates that a 1% change in price leads to a 2.5% change in quantity supplied. This means that the supply is relatively elastic, as small changes in price cause a larger change in the quantity supplied.

If the Price Elasticity of Supply Is 2