The price elasticity of supply for umbrellas is 2.Suppose you are told that following a price increase,quantity supplied increased by 30 per cent.What was the percentage change in price that brought this about?
A) 60 per cent
B) 15 per cent
C) 6.7 per cent
D) Impossible to determine without additional information

Question

Quizplus · Accepted Answer

Price elasticity of supply (PES) = % change in quantity supplied / % change in price
Given: PES = 2, % change in quantity supplied = 30%
Using the formula, we can find the % change in price:
2 = 30% / % change in price
% change in price = 30% / 2 = 15%
Therefore, the percentage change in price that brought about a 30% increase in quantity supplied is 15%. Answer choice B is correct.

The Price Elasticity of Supply for Umbrellas Is 2