Explain why is supply said to be elastic if the quantity supplied responds substantially to the changes in price

Economics Dec 13, 2020

Explain why is supply said to be elastic if the quantity supplied responds substantially to the changes in price.

Expert Solution

Supply is defined as being elastic if quantity supplied changes more than 1% when price changes by 1%. If as stated above quantity supplied "responds substantially" to changes in price, we can infer that this means a 1% change in price causes quantity supplied to change more than 1% and thus supply is elastic.

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