The price elasticity of supply is
A) negative.
B) zero.
C) positive.
D) unknown, depending on other factors.

Question

Quizplus · Accepted Answer

Price elasticity of supply measures the responsiveness of the quantity supplied to a change in price. If an increase in price leads to an increase in quantity supplied, then the price elasticity of supply is positive. If a decrease in price leads to a decrease in quantity supplied, then the price elasticity of supply is negative. A zero price elasticity of supply would mean that the quantity supplied does not respond to changes in price. However, since producers can adjust their production levels in response to changes in price, it is unlikely to have a zero price elasticity of supply. Therefore, the best choice is C, positive.

The Price Elasticity of Supply Is