If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,then the value of the price elasticity of supply is _____
A)0.38.
B)2.
C)2.67.
D)4.
E)8.

Question

Quizplus · Accepted Answer

Price elasticity of supply can be calculated using the formula:
%change in quantity supplied / %change in price

Here, %change in price = [(2-1)/1]*100 = 100%
%change in quantity supplied = [(100-20)/20]*100 = 400%

Plugging these values in the formula:
Price elasticity of supply = 400/100 = 4

Therefore, the answer is (D) 4.

If an Increase in Price from $1 to $2 Per