If a 1 percent increase in price causes a 2 percent increase in quantity supplied, then supply is
A) elastic.
B) inelastic.
C) unit elastic.
D) infinite.

Question

Quizplus · Accepted Answer

When a small percentage change in price causes a greater percentage change in quantity supplied, it is called elastic supply. In this case, a 1 percent increase in price causing a 2 percent increase in quantity supplied indicates that suppliers are highly responsive to price changes, hence elasticity is greater than 1.

If a 1 Percent Increase in Price Causes a 2