Suppose a 4 Per Cent Increase in Price Results in a 2

question 132

Multiple Choice

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

• A)2; The product is elastic.
• B)0)2; The product is inelastic.
• C)0)5; The product is inelastic.
• D)50%; The product is inelastic.