If the price elasticity of supply for a window manufacturer is 1.5,
A)a 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied.
B)supply is considered to be inelastic.
C)the manufacturer is likely operating very near capacity.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A price elasticity of supply of 1.5 indicates that supply is relatively elastic, meaning that a change in price will result in a proportionally larger change in quantity supplied. Specifically, a 10% increase in price would result in a 15% increase in the quantity of windows supplied. Choices B and C are not necessarily true based solely on the given information.

If the Price Elasticity of Supply for a Window Manufacturer