If a 20% Change in Price Results in a 15

question 503

Multiple Choice

If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about

• A) 1.33, and supply is elastic.
• B) 1.33, and supply is inelastic.
• C) 0.75, and supply is elastic.
• D) 0.75, and supply is inelastid.

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Definitions:

Selling Price

The amount of money for which something is sold, determining the profit or loss made from a transaction.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer, having nearly the same utility or function.

Productivity

A measure of the efficiency of production, often calculated as the ratio of output to inputs used in the production process.

Derived Demand

The demand for a good or service that arises from the demand for another good or service.