If the price elasticity of supply of tablets is constant and equal to 2.5, a 10 percent increase in price will result in a change in quantity supplied equal to
A) 2.5 percent.
B) 25 percent.
C) 20 percent.
D) -20 percent.

Question

Quizplus · Accepted Answer

Price elasticity of supply (PES) is calculated as the percentage change in quantity supplied divided by the percentage change in price.

PES = (% change in quantity supplied) / (% change in price)

Given that PES = 2.5, a 10% increase in price will result in a 2.5*10% = 25% increase in quantity supplied.

Therefore, the answer is B.

If the Price Elasticity of Supply of Tablets Is Constant