If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is
A) -1.
B) 1.
C) -2.
D) 2.
E) 100 percent.

Question

Quizplus · Accepted Answer

Price elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price. In this case, if the price doubles and the quantity supplied also doubles, we get:

Percentage change in quantity supplied = ((New quantity supplied - Old quantity supplied) / Old quantity supplied) x 100
= ((2Q - Q) / Q) x 100
= (Q / Q) x 100
= 100 percent

Percentage change in price = ((New price - Old price) / Old price) x 100
= ((2P - P) / P) x 100
= (P / P) x 100
= 100 percent

Therefore, price elasticity of supply = (100 percent / 100 percent) = 1, which means that the supply of the good is perfectly elastic.

If the Price Doubles and the Quantity Supplied Also Doubles,the