Asked by Kwaku Ampadu on Jun 25, 2024
Verified
If the price elasticity of supply is 0.5 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.
Price Elasticity of Supply
A measure of how much the quantity supplied of a good responds to a change in the price of that good, with higher elasticity indicating greater responsiveness.
Quantity Supplied
The amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.
- Understand the relationship between price changes and changes in quantity demanded or supplied.
Verified Answer
ME
Meaghan ElizabethJun 26, 2024
Final Answer :
False
Explanation :
The price must have decreased by 12%. Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. If the elasticity is 0.5 and the quantity supplied decreases by 6%, then the price must have decreased by 12% (6% / 0.5 = 12%).
Learning Objectives
- Understand the relationship between price changes and changes in quantity demanded or supplied.