Which of the following is true?
I. The supply of a good is inelastic if when its price changes, the percentage change in the quantity supplied exceeds the percentage change in price.
Ii. Price elasticity of supply equals the percentage change in the quantity supplied divided by the percentage change in price.
Iii. If demand is price elastic, a rise in price leads to a decrease in total revenue.
A)Only i
B)Only ii
C)Only iii
D)i and ii
E)ii and iii

Question

Quizplus · Accepted Answer

I. This statement is incorrect. The supply of a good is inelastic if when its price changes, the percentage change in the quantity supplied is less than the percentage change in price.
II. This statement is correct. Price elasticity of supply (PES) is calculated as the percentage change in quantity supplied divided by the percentage change in price.
III. This statement is correct. If demand is price elastic (PED > 1), a rise in price leads to a decrease in total revenue. This is because the increase in price causes a larger percentage decrease in quantity demanded, which more than offsets the increase in price in terms of total revenue.

Which of the Following Is True