Question

If the price elasticity of supply is less than one, what does it mean?

1) The supply is elastic
2) The supply is inelastic
3) The supply is unitary elastic
4) The supply is perfectly elastic

Answer 1

If the price elasticity of supply is less than one, it means that the supply is inelastic.

Step-by-step explanation:

If the price elasticity of supply is less than one, it means that the supply is inelastic. Inelastic supply indicates a low responsiveness to changes in price. When the price elasticity of supply is less than one, a small change in price will result in a proportionally smaller change in the quantity supplied.