Question

Price elasticity of supply of a good is 0.8. Is the supply ‘elastic’ or ‘inelastic’ and why?

Answer 1

Answer:

Dear Student, If elasticity of suppy of a good is 0.8, its supply will be inelastic. This is due to the reason that if elasticity of supply of a commodity is less than 1, then it means that a proportionate increase in its price will lead to a less than proportionate increase in its supply.