If a 15% change in price results in a 20% change in quantity supplied, then the price elasticity of supply is about a. 0.75, and supply is elastic. b. 1.33, and supply is elastic. c. 1.33, and supply is inelastic. d. 0.75, and supply is inelastic.

The correct answer is option b.

Explanation:

The price elasticity of supply shows the impact of change in price level on the quantity demanded of the good.

It is calculated by the ratio of percentage change in quantity supplied to percentage change in price level.

The percentage change in price level is= 15%

The percentage change in quantity supplied is= 20%

The price elasticity of supply will be

=% change in quantity/% change in price

=20%/15%

=1.33

Since, the elasticity is higher than 1 it means supply is elastic.

So, option b is the correct answer here.

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