Suppose that the price elasticity of supply of cheese is 0.80. If the price of cheese rises by 20%, the quantity supplied will increase by 16%.

Question

Quizplus · Accepted Answer

The price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. Therefore, with an elasticity of 0.80 and a price increase of 20%, the quantity supplied would increase by $0.80 \times 20\% = 16\%$.

Suppose That the Price Elasticity of Supply of Cheese Is