Ceteris paribus, if a 6% increase in price causes an 8% increase in quantity supplied, then:
A)supply is elastic.
B)supply is unit elastic.
C)supply is inelastic.
D)the supply curve is perfectly vertical.

Question

Ceteris paribus, if a 6% increase in price causes an 8% increase in quantity supplied, then:
A)​supply is elastic.
B)​supply is unit elastic.
C)​supply is inelastic.
D)​the supply curve is perfectly vertical.

Quizplus · Accepted Answer

An increase in price causes a more than proportionate increase in quantity supplied, indicating that supply is sensitive to changes in price. This is characteristic of elastic supply. If the increase in price led to an equal percentage increase in quantity supplied, it would be unit elastic, and if the increase in quantity supplied was less than the increase in price, it would be inelastic. A perfectly vertical supply curve would indicate that quantity supplied is fixed at a certain level regardless of changes in price.

Ceteris Paribus, If a 6% Increase in Price Causes an 8