If the price elasticity of supply for a good is 0.75,then
A) the percentage change in the quantity supplied is less than the percentage change in price.
B) the supply is elastic.
C) an increase in the price boosts the quantity supplied by a larger percentage.
D) the supply is inelastic so the demand must also be inelastic.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

A price elasticity of supply of 0.75 means that for every 1% increase in price, the quantity supplied will only increase by 0.75%. Thus, the percentage change in quantity supplied is less than the percentage change in price, making choice A the correct answer. Choice B is incorrect because a supply elasticity less than 1 is considered inelastic. Choice C is incorrect because an increase in price would result in a smaller percentage increase in quantity supplied. Choice D is incorrect because we cannot determine the elasticity of demand based solely on the elasticity of supply.

If the Price Elasticity of Supply for a Good Is