question archive If the price elasticity of supply is 1
If the price elasticity of supply is 1
Subject:EconomicsPrice:2.88 Bought3
If the price elasticity of supply is 1.5, what price increase would lead to a 10% increase in quantity supplied?
a. 10% price increase.
b. 6.67 price increase.
c. 15% price increase.
d. 5% price increase.
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b. 6.67 price increase.
If the price elasticity of supply is 1.5, this means that a 1% rise in price causes an increase in quantity supplied of 1.5%.
Hence the price increase would lead to a 10% increase in quantity supplied is 10/1.5 = 6.67%b
