The price elasticity of supply is 0.6. This means that
A) a $10 increase in price would increase quantity supplied by 60.
B) a 150 percent increase in price would increase quantity supplied by 90 percent.
C) a 50 percent increase in quantity will occur when price increases by 30 percent.
D) a 10 percent increase in quantity will occur when price increases by 6 percent.

Question

Quizplus · Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. An elasticity of 0.6 means that for a 150% increase in price, the quantity supplied would increase by 0.6 * 150% = 90%.

The Price Elasticity of Supply Is 0