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If the price of a good increases by 10% and the quantity supplied increases by 30%,...

If the price of a good increases by 10% and the quantity supplied increases by 30%, what is the
elasticity of supply? Does this product have an elastic, unitary elastic or inelastic supply?

explain why
business   economics   
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Answer #1

Elasticity of supply= % change in the quantity/% change in price = 30%/10%= 3.

The product has an elastic supply.

Supply is elastic when the value of the price elasticity of supply is greater than 1. Supply is inelastic when the value of the price elasticity of supply is less than 1 and supply is unitary elastic when its value equals 1.

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