If a 40% change in price results in a 25% change in quantity supplied,then the price elasticity of supply is about
A)0.63,and supply is elastic.
B)0.63,and supply is inelastic.
C)1.60,and supply is elastic.
D)1.60,and supply is inelastic.

Question

Quizplus · Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, it is 25% / 40% = 0.625, which is approximately 0.63. Since it is less than 1, supply is inelastic.

If a 40% Change in Price Results in a 25