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Question
Which of the following measures of price elasticity shows elasticity shows elastic supply?
Options
0
0.5
1.0
1.5
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Solution
1.5
Explanation:
-
Elastic Supply is characterized by a price elasticity of supply greater than 1. This means that the percentage change in quantity supplied is greater than the percentage change in price.
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The value 1.5 indicates elastic supply, as it is greater than 1. The other options (0, 0.5, and 1.0) indicate inelastic or unitary elastic supply.
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