If the quantity supplied changes by a greater percentage than the percentage change in price, the supply is?

If the quantity supplied changes by a greater percentage than the percentage change in price, the supply is?

• A. Inelastic Supply
• B. Perfectly Inelastic Supply
• C. Elastic Supply
• D. Unit Elastic Supply

Answer: (C)

Elastic supply means producers change the quantity they are willing and able to supply by a larger percentage than the price changes. This happens when supply is responsive to price, so a small increase in price leads to a relatively bigger increase in output. The idea is captured by the elasticity of supply: if the percentage change in quantity supplied is greater than the percentage change in price, the elasticity is greater than 1, which defines an elastic supply. For example, if price rises by 8% and quantity supplied rises by 24%, the elasticity is 3, showing a strong, elastic response because producers can adjust production quickly or efficiently. In contrast, inelastic supply means quantity responds to price changes by a smaller percentage, perfectly inelastic means quantity doesn’t change at all with price, and unit elastic means the two changes are equal in percentage. Here, because the quantity supplied moves more than price, the situation is elastic supply.

Elastic supply means producers change the quantity they are willing and able to supply by a larger percentage than the price changes. This happens when supply is responsive to price, so a small increase in price leads to a relatively bigger increase in output. The idea is captured by the elasticity of supply: if the percentage change in quantity supplied is greater than the percentage change in price, the elasticity is greater than 1, which defines an elastic supply. For example, if price rises by 8% and quantity supplied rises by 24%, the elasticity is 3, showing a strong, elastic response because producers can adjust production quickly or efficiently.

In contrast, inelastic supply means quantity responds to price changes by a smaller percentage, perfectly inelastic means quantity doesn’t change at all with price, and unit elastic means the two changes are equal in percentage. Here, because the quantity supplied moves more than price, the situation is elastic supply.