Question

The price elasticity of supply is 0.9​,

and price increases by 9 percent. As a​ result, the quantity supplied will increase by ____ percent.  

​(Enter your response as a real number rounded to one decimal​ place, and do not use a percentage​ sign.)

Answer 1

The price elasticity of supply measures the change in quantity supplied with respect to the changes in price.

That is, if quantity supplied Increases with price then the supply is said to be elastic.

Given that price elasticity of supply = 0.9, and the price increases by 9 percent.

Then the quantity supplied can be determined by the equation of PES as,

PES = %change in quantity supplied / %change in price

0.9 = %change in quantity supplied / 9%

Then, %change in quantity supplied = 0.9 * 9

= 8.1//