Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run.If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%,then the quantity supplied of soccer balls will increase by about
A)0.67% in the short run and 0.17% in the long run.
B)3% in the short run and 1.2% in the long run.
C)6% in the short run and 24% in the long run.
D)66.7% in the short run and 16.7% in the long run.

Question

Quizplus · Accepted Answer

In the short run, the price elasticity of supply (PES) is 0.3, which means that the quantity supplied of soccer balls will increase by 6% (20% increase in price divided by 0.3) in the short run.

In the long run, the PES is 1.2, which means that the quantity supplied of soccer balls will increase by 24% (20% increase in price divided by 1.2) in the long run.

Therefore, the correct answer is C, 6% in the short run and 24% in the long run.

Suppose the Price Elasticity of Supply for Soccer Balls Is