If the quantity supplied of candy increases by 1% when the price of candy increases by 2%, which of the following is TRUE?
A) Supply for candy is elastic, and price elasticity of supply = 2.0.
B) Supply for candy is inelastic, and price elasticity of supply = 2.0.
C) Supply for candy is elastic, and price elasticity of supply = 0.5.
D) Supply for candy is inelastic, and price elasticity of supply = 0.5.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price, which equals 0.5 (1% / 2%). A value of less than 1 indicates that the supply is inelastic.

If the Quantity Supplied of Candy Increases by 1% When