Calculating Price Elasticity Of Supply
Suppose an effective marketing campaign increases the demand for high-quality agave syrup, resulting in a 40% increase in price and a 20% increase in the quantity supplied. What is the price elasticity of supply, and is the supply considered elastic or inelastic?
A
The price elasticity of supply is 0.5, meaning supply is inelastic.
B
The price elasticity of supply is 0.5, meaning supply is elastic.
C
The price elasticity of supply is 2.0, meaning supply is inelastic.
D
The price elasticity of supply is 2.0, meaning supply is elastic.