Suppose that the elasticity of supply is 0.60 and the price increases by 5%.We will predict a percent increase in the quantity supplied of:
A)8.33.
B)12.
C)3.
D)6.

Question

Quizplus · Accepted Answer

The elasticity of supply is 0.60, meaning that for every 1% increase in price, the quantity supplied increases by 0.60%. Therefore, a 5% increase in price would result in a 3% increase in quantity supplied (0.60 * 5% = 3%).

Suppose That the Elasticity of Supply Is 0