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. The price elasticity of supply is
A. 0. B. 0.5. C. 1. D. 5.
Correct Answer: C
Explanation
The price elasticity of supply = % change in quantity supplied / % 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
