When the price rises by 4% and the quantity supplied increases by 8%, how would you describe the supply elasticity?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

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The supply is elastic with respect to priceThe supply responds to changes in incomeThe price elasticity of demand equals -2The price elasticity of supply equals -2None of the above

Explanation

Since the quantity supplied changes by a greater percentage than the price (8% vs. 4%), the supply is considered price elastic. This means producers are responsive to price changes. The other options are incorrect because they refer to income elasticity or demand elasticity, which are not relevant here.

Practice related questions from the same subject.

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3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

When the price rises by 4% and the quantity supplied increases by 8%, how would you describe the supply elasticity?

Explanation

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