The price elasticity of supply for a good is 3 if:
A) a 1 percent increase in price leads to a 3 percent decrease in quantity supplied.
B) a 1 percent decrease in price leads to a 3 percent decrease in quantity supplied.
C) a 9 percent decrease in price leads to a 3 percent decrease in quantity supplied.
D) None of the above are true.

Question

Quizplus · Accepted Answer

Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. A 1 percent decrease in price leading to a 3 percent decrease in quantity supplied indicates an elasticity of 3.

The Price Elasticity of Supply for a Good Is 3