Suppose That the Price Elasticity of Supply Is 1

question 44

Multiple Choice

Suppose that the price elasticity of supply is 1.25 and the quantity supplied increases by 10%. Other things being equal, the percentage change in the price should be

• A) a 0.8% increase in the price.
• B) an 8% increase in the price.
• C) a 1.25% increase in the price.
• D) a 12.5% increase in the price.

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