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1.2.5 Elasticity of supply

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Question 4

An independent manufacturer of specialized carbon-fiber bicycle frames operates with some spare capacity and has estimated the price elasticity of supply (PES) of its frames to be +1.6. Following a sudden contraction in market demand, the equilibrium price of these frames falls by 12.5%. Which one of the following is the resulting percentage change in the quantity supplied of these carbon-fiber frames?

A decrease of 7.81%7.81\%7.81%

A decrease of 2.0%2.0\%2.0%

A decrease of 20.0%20.0\%20.0%

An increase of 20.0%20.0\%20.0%

1.2.5 Elasticity of supply Questions

  1. A Level
  2. /Economics
  3. /1.2.5 Elasticity of supply