If supply is price inelastic the value of the price elasticity of supply must be ?
Correct answer: C. less than 1
- A. infinite
- B. Zero
- C. less than 1
- D. none of these
- E. greater than 1
Explanation
Price-inelastic supply means the percentage change in quantity supplied is smaller than the percentage change in price. Therefore, the price elasticity of supply is less than 1.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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