If the percentage change in quantity supplied is 10% and the percentage change in price is 5% then the supply for the good is
A)Elastic
B)Inelastic
C)Unit elastic
D)Perfectly inelastic

Question

Quizplus · Accepted Answer

We can determine the elasticity of supply using the formula:

Elasticity of supply = (percentage change in quantity supplied) / (percentage change in price)

In this case, the percentage change in quantity supplied is 10% and the percentage change in price is 5%.

So,

Elasticity of supply = 10% / 5% = 2

Since the elasticity of supply is greater than 1, the supply for the good is elastic. This means that the quantity supplied of the good is sensitive to changes in price.

If the Percentage Change in Quantity Supplied Is 10% and the Percentage