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Question
If the price elsaticity of supply is 1 and the percentage change in price is 10, then the percentage change in quatity supplied should be ______.
Options
10
Greater than 10
Le.sser than 10
1
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Solution
If the price elsaticity of supply is 1 and the percentage change in price is 10, then the percentage change in quatity supplied should be 10.
Explanation:
The price elasticity of supply (Es) is calculated as:
Es = `("Percentage change in quantity supplied")/("Percentage change in price")`
1 = `("Percentage change in quantity supplied")/(10%`
Therefore, the percentage change in quantity supplied must also be 10% for the elasticity to equal 1.
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