When quantity supplied is very responsive to a change in price, supply is
A) elastic.
B) unit-elastic.
C) inelastic.
D) income sensitive.

Question

Quizplus · Accepted Answer

When a change in price leads to a proportionately large change in the quantity supplied, supply is said to be elastic. This means that suppliers are very responsive to changes in the market price, and are able to adjust their production levels accordingly. In general, elastic supply occurs when there is a significant amount of spare capacity in the production process, such that suppliers can easily increase or decrease output in response to changes in demand.

When Quantity Supplied Is Very Responsive to a Change in Price