Consider a linear, upward sloping supply curve. If the supply curve shifts upward, then:
A) the price elasticity of supply will increase.
B) the price elasticity of supply will increase if the slope of the supply curve is greater than one.
C) the price elasticity of supply will increase if the slope of the supply curve is greater than one and the lowest price needed to induce firms to supply anything is positive.
D) the price elasticity of supply will be constant.
E) none of the above

Question

Quizplus · Accepted Answer

If the supply curve shifts upward, it means that at each price level, firms are willing to supply less. If the slope of the supply curve is greater than one and the lowest price needed to induce firms to supply anything is positive, then a relatively small change in price will cause a large change in quantity supplied, resulting in an increase in price elasticity of supply.

Consider a Linear, Upward Sloping Supply Curve