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
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