Question

If the price elasticity of supply for blue jeans is 1.3, an increase in the price of blue jeans of 10 percent would increase the quantity supplied of blue jeans by 13 percent.

Options:
A. True
B. False

Answer 1

The statement is True. A price elasticity of supply greater than 1 indicates an elastic supply, where a percentage change in price leads to a greater percentage change in quantity supplied.

Step-by-step explanation:

The statement is True. The price elasticity of supply measures how sensitive the quantity supplied is to changes in price. A price elasticity of supply greater than 1 indicates that supply is elastic, meaning that a percentage change in price leads to a greater percentage change in quantity supplied. In this case, if the price of blue jeans increases by 10 percent, the quantity supplied would increase by 13 percent, indicating an elastic supply.