If the price elasticity of supply is 0.8,and price increased by 5%,quantity supplied would
A)increase by 4%.
B)increase by 6.25%.
C)decrease by 4%.
D)decrease by 6.25%.

Question

Quizplus · Accepted Answer

The price elasticity of supply measures the responsiveness of quantity supplied to a change in price. With an elasticity of 0.8 and a 5% increase in price, the quantity supplied would increase by 0.8 * 5% = 4%.

If the Price Elasticity of Supply Is 0