Question

"In 2012, Canadian farmers did not suffer from drought conditions that affected the United States, but they did enjoy the higher corn prices. Canadian farmers reacted to the higher price by planting more corn. Suppose that the price of corn increased by 30 percent and the Canadian farmers increased the quantity of corn they supply by 20 percent. The supply of corn is"

Answer 1

Answer: D) inelastic.

Step-by-step explanation:

To find out the elasticity of the supply of corn, use the Price Elasticity of Supply (PES) formula. The price elasticity of supply shows how much quaintly supplied would change by if there was a change in price.

Price elasticity of supply = Change in quantity supplied / Change in price

= 20% / 30%

= 0.66

When the Price elasticity of supply is less than one, the supply is said to be inelastic. The PES here is less than 1 so corn is inelastic.