The price elasticity of supply is?

An increase in the price of a commodity from $10 to $ 15 leads to an increase in the quantity supplied from 10 units to 15 units.

A. 0.
B. 0.5.
C. 1.
D. 5.

Correct Answer: Option C

Explanation

The price elasticity of supply = % change in quantity supplied over % change in price. When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.

change in price = 10 – 15 = 5
change in quantity = 10 – 15 = 5
5 ÷ 5 = 1