Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the price elasticity of supply is 2. What is the percentage change in the equilibrium price?
A) 4%
B) 5%
C) 15%
D) 20%

Question

Quizplus · Accepted Answer

The percentage change in equilibrium price can be calculated using the formula: % change in price = % change in supply / (elasticity of demand + elasticity of supply). Here, it is 20% / (3 + 2) = 4%.

Suppose That the Percentage Change in Supply Is 20%, the Price