If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is

If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is

• A. 0.30
• B. 0.55
• C. 1.80
• D. 1.20

Answer: (C)

Price elasticity of supply measures how much the quantity supplied responds to a change in price. It’s calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, price goes up 5% and quantity supplied goes up 9%, so elasticity = 9% / 5% = 1.8. An elasticity above 1 means elastic supply — producers respond more than proportionally to price changes. So a 5% price increase corresponds to about a 9% rise in quantity supplied, giving elasticity of 1.8.

Price elasticity of supply measures how much the quantity supplied responds to a change in price. It’s calculated as the percentage change in quantity supplied divided by the percentage change in price. Here, price goes up 5% and quantity supplied goes up 9%, so elasticity = 9% / 5% = 1.8. An elasticity above 1 means elastic supply — producers respond more than proportionally to price changes. So a 5% price increase corresponds to about a 9% rise in quantity supplied, giving elasticity of 1.8.