Question

The price elasticity of supply for a good is 3 if a _____ in price leads to a 3% decrease in the quantity supplied. 1% increase 1% decrease 9% decrease 9% increase

Answer 1

The price elasticity of supply for a good is 3 if a 1% decrease in price leads to a 3% decrease in quantity supplied.

Explanation:

The measure of the response that a supply for goods and services shows after the modification of prices refers to the Price elasticity. When the price of any goods or services increases there will be a rise in the supply of goods and services. When the prices of any goods or services decreases then the supply of those goods and services will also decrease.

Price elasticity also measures the demand that a product or services has based on the modification of the price. When the product tends to be affected by the price changes it is said to be elastic. When it is not responding to the prices of the product the n these are said to be inelastic. In the given example the price elasticity of the supply of a good is said to be 3% and if a 1% decrease in price leads to a 3% decrease in quantity supplied.