If the price elasticity of supply is 3, supply is
A) unaffected by price changes.
B) inelastic.
C) unit elastic.
D) elastic.

Question

Quizplus · Accepted Answer

If the price elasticity of supply is above 1, it is considered elastic. Therefore, a price increase will result in a relatively larger increase in the quantity supplied. A price decrease will result in a relatively larger decrease in the quantity supplied. A price elasticity of 3 indicates that a 1% change in price will result in a 3% change in supply.

If the Price Elasticity of Supply Is 3, Supply Is