Final answer:
The quantity supplied of cars would d) increase by 120% if the price increased by 100% with a price elasticity of supply of 1.2. The formula used is the percentage change in quantity supplied = Price elasticity of supply × Percentage change in price.
Step-by-step explanation:
If the price elasticity of supply of cars is 1.2, and price increased by 100%, to determine the percentage change in quantity supplied, we can use the formula:
Percentage change in quantity supplied = Price elasticity of supply × Percentage change in price
Inserting the values given in the question:
Percentage change in quantity supplied = 1.2 × 100%
Percentage change in quantity supplied = 120%
Therefore, the quantity supplied of cars would increase by 120% if the price increased by 100% with a price elasticity of supply of 1.2.
The correct answer would be option (d).