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If a 20 percent increase in the price of shoes leads to a 10 percent increase in the quantity supplied of shoes, then the price elasticity of supply is equal to:

a) 2 b) 20 c) 10 d) 0.5 e) 0.2

Respuesta :

Answer:

D) 0.5

Explanation:

Elasticity of supply measures the degree of responsiveness of quantity supplied to changes in price.

Elasticity of supply = percentage change in quantity supplied / percentage change in price

10% / 20% = 0.5

A coefficient of 0.5 indicates supply is inelastic.

Inelastic supply means that the quantity supplied is less responsive to changes in price.

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