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Suppose value of the price elasticity is 4. What does this mean?
A 1% increase in the price of the good causes the supply curve to shift upward by 4%
A 4% increase in the price of good causes quantity supplied to increase by 1%
for every $1 increase in price, quantity supplied increases by four units
a 1% increase in the price of the good causes quantity supplied to increase by 4%
2 Answers
- Anonymous10 years agoFavorite Answer
The answer is D. The quantity supplied will increase=4%. The elasticity does not say that the supply curve will shift.
- Sipra MLv 610 years ago
*Elasticity = 4 means very elastic supply.(E>1)
* very inelastic supply -E very <1.
* You calculate it: supply elasticity= % change in quantity supply / % change in price
