question archive If_____percent _____ in price results in a 3% decrease in quantity supplied, it can be concluded that supply is price elastic
If_____percent _____ in price results in a 3% decrease in quantity supplied, it can be concluded that supply is price elastic
Subject:EconomicsPrice:2.88 Bought3
If_____percent _____ in price results in a 3% decrease in quantity supplied, it can be concluded that supply is price elastic.
explain how you know which is the correct answer
-less than 3; increase
-greater than 3; increase
-greater than 3; decrease
-less than 3; decrease
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The correct answer is: -less than 3; decrease.
The law of supply states that all the other things held constant, the quantity supplied of a good or service increases as the price increases and decreases as the price falls. Therefore, there is a direct relationship between the quantity supplied of a good and its price.
Therefore, if the supply for a good or service is elastic, then a small change in price will lead to a large change in the quantity supplied. If the price increases by a certain percentage, then the quantity supplied will increase by a larger percentage than the increase in price. If the price falls by a given percentage, then the quantity supplied falls by a larger percentage than the fall in price.
