Question

A 40% increase in price led the quantity supplied of bicycles in a competitive market to increase from 320.00 to 350.00.

What is the price elasticity of supply for bicycles?What is the best description of the price elasticity of supply for bicycles?A. inelastic
B. elastic
C. normal
D. unitary elastic

Answer 1

A. inelastic

Step-by-step explanation:

Price elasticity of supply = Percentage change in Quantity supplied / Percentage change in price

% change in Quantity supplied = (350.00-320.00) / 350.00

% change in Quantity supplied = 0.08571429

% change in Quantity supplied = 8.57%

Price elasticity of supply = 8.57/40

Price elasticity of supply = 0.21425

Conclusion: The price elasticity of supply is inelastic because the elasticity is below 1.