Question

if a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied, supply is said to be group of answer choices inelastic, inferior unit elastic, normal elastic, normal elastic, inferior inelastic, normal

Answer 1

Supply is considered elastic when the ratio of the percentage change in quantity supplied to the percentage change in price is greater than one, as is the case with a 7% price increase and a 12% increase in quantity supplied.

Step-by-step explanation:

When a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied, the supply is said to be elastic. This is because the elasticity of supply is calculated as the ratio of the percentage change in quantity supplied to the percentage change in price. Since the ratio in this case is greater than one (12/7 = 1.71), it signifies that the percentage change in quantity supplied is greater than the percentage change in price, which is the definition of elastic supply.